CannTech: Technologies in the Cannabis Industry
What Is CannTech and How Is the Cannabis Industry Driving Technological Innovation?
In 2018, the legal cannabis market exceeded $10 billion. According to projections from the Marijuana Business Factbook, by the end of this year, it will grow by at least another $2 billion. As more states and countries legalize cannabis, the number of consumers continues to rise. This growth is attracting tech startups offering digital solutions to make buying, delivering, and consuming cannabis as simple and convenient as possible. Many hope to become the next “Uber for cannabis” in their niche.
These technologies have formed the foundation of a new industry known as CannTech (from “cannabis tech”).
CannTech for Production, Delivery, and Consumption
The term CannTech usually refers to three main categories:
- Devices for consuming cannabis, such as vaporizers and dosing devices
- E-commerce platforms and delivery apps
- Home cannabis growing systems
Industrial cannabis cultivation equipment is sometimes included in CannTech, but the term more often refers to digital solutions or devices that simplify the purchase and consumption of cannabis for end users.
Devices for Consuming Cannabis
There are many ways to consume cannabis for medical and recreational purposes: pipes, joints, edibles (foods containing THC), and oils. Recently, electronic devices have joined this list.
One of the most popular is the vaporizer, which is rapidly gaining traction in the U.S. and Canada due to its almost complete lack of odor and reduced health risks compared to smoking. Like e-cigarettes, these devices heat cannabis to a temperature that releases its active compounds.
Dosing devices are a separate niche within CannTech. Dispenser pens and dosed vaporizers are mainly used for medical purposes.
Additionally, “breathalyzers” are being developed for medical cannabis use. These devices detect levels of tetrahydrocannabinol (THC) and other active substances in a patient’s body through their breath.
Innovative cannabis consumption methods are attracting attention from venture capital and private equity funds. For example, in the past year alone, vaporizer manufacturer PAX Labs raised $420 million from Tao Capital Partners, Tiger Global Management, and other investors.
Convenient Purchasing and Delivery
According to unofficial estimates, there are about 2,000 legal cannabis producers in the U.S. Most of them—around 700 per state—are located in California and Colorado. They primarily sell their products through retail outlets known as dispensaries. However, there are still very few technologies that effectively connect producers with end consumers.
The leading player in this segment in the U.S. is Eaze, an app for ordering cannabis with home delivery. At the end of 2018, the company raised $65 million in a Series C round, making it one of the top contenders for the title of “Uber for cannabis.”
One of Eaze’s most promising competitors is the startup Dutchie, which delivers cannabis in 18 states. In September of this year, Dutchie raised $15 million from Gron Ventures and several other venture funds. John Oringer, founder and CEO of Shutterstock, is also an investor in Dutchie.
Devices for Home Cannabis Cultivation
The movement to legalize cannabis has made it possible to grow cannabis at home in many countries. For example, last week, Australia’s capital voted to legalize personal cannabis use, allowing residents to grow up to two plants at home. Thailand is also considering a bill that would let each household grow up to six plants on their property.
This trend is driving demand for home cannabis growing devices. Both traditional equipment manufacturers and tech startups are entering this market. For instance, Cloudponics introduced a specialized cannabis growing module in 2017, and in May of this year, Leaf raised $4.5 million to develop its plug-n-plant system, which lets users monitor cannabis plant growth from their smartphones.