Jun 15, 2023
As more states legalize medicinal and recreational cannabis, the budding industry is searching for ways to drive efficiency and profitability through innovative technology.
As more states legalize medicinal and recreational cannabis, the budding industry is searching for ways to drive efficiency and profitability through innovative technology. Businesses face challenges with cannabis still being illegal on the federal level. One difficulty is how some companies in the market are forced to vertically integrate, or control multiple stages of their production process and supply chain. That can mean operating retail stores, building a brand and cultivating product all at once, said Art Minson, president and CEO at LeafLink, a wholesale cannabis platform created to connect brands with distributors.Minson was in town to participate as a panelist at this week's Generations 2023 conference, which is focused on the fintech and insurtech industries.Through cannabis tech, such as LeafLink's marketplace for the industry, companies can more effectively manage their business while also finding their niche, he said."Where we want to play is really on that technology piece of it, to really be the technology layer for the industry that makes it run more efficiently and allows for the specialization," Minson said.New York-based LeafLink started as a vertical software marketplace and has transformed its technology to solve some of the larger pain points the cannabis industry faces, he said. Cannabis tech solutions can help businesses reduce labor costs, streamline their processes, meet regulatory requirements and ensure products are available in specific markets.Banks hesitant to service cannabis businessesLeafLink is working to launch a banking-as-a-service product for the cannabis industry, as the market faces major difficulties in accessing a banking system that will cater to their needs. Minson said he believes the industry could be an "investment banker's dream," but the federal illegality creates hesitancy for highly regulated financial companies."Banking is a really tough thing for this industry. You can't walk into a JPMorgan or Bank of America," he said. "So we've been working on bringing banking products to the industry."Minson's tech company has also faced hurdles with gaining equal access to banking. He says LeafLink typically works with regional institutions; however, that sector has faced major headwinds following recent bank collapses."We had to play the game of moving money around and making sure our deposits are safe," he added.That's why the company is a strong supporter of getting the Secure and Fair Enforcement Banking Act — or SAFE Banking Act — passed. If signed into law, it would protect banks from penalties for providing services to legitimate cannabis-related businesses in states where it is legal.North Carolina weighs measures to legalize cannabisMinson said he never envisioned he'd be running a cannabis tech company, "but it's a fascinating industry." The ecosystem is expected to value $30 billion by the end of this year and reach $100 billion by 2030."There's a lot of capital that has flowed into the cannabis space," he added. "I think you will also see more states seeing the economic and social benefits of it. And so, as a result, I think they (cannabis businesses) are going to continue to grow."North Carolina currently has two bills related to cannabis and marijuana under consideration in the legislature. The first, known as Senate Bill 3 or the NC Compassionate Care Act, would allow medical uses of cannabis. While similar measures have stalled in the past, this bill — with bipartisan sponsors — appears to have momentum. It has cleared the state Senate and a first reading in the House, where it has been referred to committees.Senate Bill 346, sponsored by three Democrats, has longer odds of passing in the Republican-controlled legislature. Called the Marijuana Justice and Reinvestment Act, it would legalize recreational use and provide funds to mitigate the negative impacts prohibition has had on residents.