We’ve joined investors and techies alike at the OurCrowd Investor Summit in Jerusalem, where Micah Tapman, among others, spoke about his vision for the cannabis market. Tapman believes it is just a matter of time for public perception to catch up with the reality of the science behind cannabis, explaining that companies are having trouble accessing basic resources they need due to companies staying out of the cannabis space in the U.S. due to federal regulation issues.
Micah Tapman is the Managing Partner and co-founder of 7thirty Capital, a principal investment firm that specializes in the cannabis and cannabidiol (CBD) market and all the tech that goes along with it. Tapman also serves as a director of BDS Analytics.
During a sit-down interview, Tapman divulged just a bit about the companies in the cannabis space he’s already invested in and gave color about the current needs of the market that are not being met.
“So two [companies] we’ve invested in already that we love and we’ll be reinvesting in are BDS Analytics and the other is PathogenDX. PathogenDX uses DNA testing to identify bacterial and fungal contaminants in any agricultural product. So cannabis is just one of many products that they could be testing for. And the idea is to roll this out globally to all major agricultural crops. Other big ones that we’re really looking at are the nutrients and irrigation systems, so smarter growing and becoming more efficient with grow technology.”
The investment mogul says the main areas he’s looking to work in are bio, agricultural, advertising and retail technologies in addition to marketplaces and trading platforms. He believes blockchain can come in as a powerful tool to guarantee the integrity of transactions, since everything is documented on a public ledger. Previously, you had to use a third party such as a bank, which would certify that the transaction took place. With blockchain, this step can be eliminated.
Blockchain technology does present an issue, however. With so much documentation, private citizens could lose some of their privacy. Governments are keen on the platform because it could help track border-crossers or those who are buying cannabis multiple times a day from dispensaries with the intention to redistribute it. The idea is that blockchain technology would catalog an individual’s purchases and prevent him or her from frequenting dispensaries more than the state’s cap. For example: some governments try to keep medical marijuana out of the hands of those who don’t have a prescription. Tapman suggests blockchain could also help customers verify their status as patients during a purchase.
Moving on to more of the issues and gaps in the industry, Tapman noted a publicly traded company, called Kush Supply, which is a packaging company that built a solution specifically for cannabis.
“The reality is they were solving a problem which was cannabis companies wanted specific packaging for cannabis and nobody was making that packaging,” he explained.
In addition to providing packaging for cannabis distributors, Tapman is in conversation with companies that are making environmentally-friendly containers using recycled ocean plastics. Another option on the table is to use hemp oil to make plastic instead of using a petroleum-based oil. He comments that multinational corporations are not currently engaging with the cannabis industry because they are not allowed to since the product is not federally legal — and this makes it tough for cannabis companies to gain access to simple resources that every company needs.
“It’s just sort of a gap. It’s an opening for sort of what I would call normal businesses to get started. So one of the companies that I helped to found when I was a CanopyBoulder we invested early on is a company called Wurk. They do human resources platform. It’s a very basic concept, it’s not rocket science, but nobody else was doing it. Nobody else would run payroll for cannabis companies.”
When asked what sort of companies Tapman is looking for, he said it was enterprise resource planning software.
“It doesn’t exist for cannabis. Or point of sale systems. We have seventeen point of sale systems that have been invented to deal with the cannabis issue and each one of them is trying to solve the problem. Of those, two or three may end up being sustainable businesses that actually compete with Square and Stripe and all of the other POS systems out there. And so if you’re NCR for example, which is a very large POS system, why didn’t NCR jump into the cannabis sector? Well they probably overlooked it because it was too small. They’re a big multinational corporation. They weren’t paying attention to it.”
Tapman reminisced on the beginning stages of the industry, when he saw companies raising $3-5 million. Today he sees cannabis companies reaching for — and getting between $10 and $30 million.
To read more on the nitty gritty of what’s going on in the rising cannabis industry, click here.