With Kraft Heinz investing in a cannabis company, there are two stories going on but one important lesson…
When I saw Kraft Heinz co-led a $23 million funding round in the cannabis startup Flowhub, I knew two stories were happening at the same time for the ketchup maker.
The first one is that legacy companies are starting to realize they need to get into the cannabis game or risk being left behind.
It’s just part of the normalization of cannabis.
Now, larger companies like Kraft Heinz are normally going to be cautious when entering a new market and may just dip their toes into the water. After all, if the experiment doesn’t work, shareholders will have a lot of questions.
But this isn’t exactly a big move or a game-changer.
This investment shows me that cannabis is just an agricultural-based consumer product to Kraft.
Cannabis Tech Reaches the Big Time
Flowhub is a software company that serves dispensaries by offering technology to improve inventory control, compliance, and business intelligence.
With Flowhub, dispensaries can use handheld devices to scan a customer’s ID at the door. After that, dispensary employees can verify the data to complete a transaction.
It can also use data from purchases to help customers have a more personalized experience.
This investment seemed a little out of place for Kraft Heinz, but that’s not the bigger story.
The bigger story is that cannabis tech just received a shining endorsement.
The Power of Cannabis Tech
I’ve been cautious about the cannabis tech sector thus far.
It’s not that there aren’t good ideas out there. It’s just that some of the solutions aren’t scalable or won’t be needed in the next few years.
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Some ideas are too early.
For example, I’ve talked about how the industry doesn’t need a cannabis cryptocurrency. We know that the story ends with cannabis being legalized in the United States just a few years from now, and cannabis enthusiasts will eventually be able to pay for it with their credit card.
Cannabis crypto coins are simply not a necessary solution.
But I don’t want to just pick on cryptocurrencies.
There are also cannabis tech companies that are making important products.
The industry needs cannabis breathalyzers, but it’s too early to tell which company has the best chance of winning this part of the market.
In terms of Flowhub, software that offers important data and tracking will surely be used throughout the industry.
I just don’t know how much of that market Flowhub can win and how much it will be worth. When cannabis is legalized in the United States, a well-established company like Amazon or Microsoft could jump in and offer similar services.
That’s why I’ve been cautious when talking about cannabis and tech.
However, the investment from Kraft Heinz shows me that the cannabis tech sector is a segment that we should be watching closely.
Executive Director, National Institute for Cannabis Investors
5 responses to “This Is a Shining Moment for the Cannabis Sector”
November 01 2019