2014-08-27

Co.Labs

Why The Marijuana Industry Needs A Hackathon

It wants to attract the tech world’s best techies to its ranks.



The marijuana industry wants to establish itself, fast. Dispensary raids and an overall mixed public perception are making industry insiders weary of their reputations. Combined with murky federal restrictions and potential legislative whims, they understand that the marijuana industry is an easy target for gradual shutdown. But weed investors and entrepreneurs think technology can turn that around.

So from September 26th to the 28th, the cannabis social networking site MassRoots and the app developer CannaBuild will host the marijuana industry’s first-ever formal hackathon in Denver, called the Marijuana Technology Startup Competition. Attendees will form pitch teams and build a working concept using web technology over the course of the weekend, while receiving support from recognized industry leaders. Mentors and investors will judge and possibly propel forward a few ideas into full-fledged businesses.

MassRoots and CannaBuild hope to spark the interest of the tech world’s best and brightest, while setting in place a solid growth foundation for the budding marijuana industry. Task number one is bringing talent in from the tech world.

"I don’t want anyone’s leftovers," says Zach Marburger, cofounder of CannaBuild. "If you’re good enough to work at Google, then we want you."

The Tech World

MassRoots and CannaBuild recently moved into a large office space together in Denver. Only a wall divides the two businesses from each other. On one side are the guys from MassRoots, all in their early twenties and recent grads. On the other side is CannaBuild, former college classmates from the Midwest, who are approaching 30.

CannaBuild’s cofounder and CEO, Zach Marbuger, feels the age difference, a difference he says is good to have. The dynamic is good, and he says the atmosphere is always interesting. These young companies plan to recruit more techies to fill out the rest of their office space to join in on the fun.

"We’ve got this 4,000-square-foot building that we want to turn into a sort of Googleplex, if you will," says Marburger. He’s serious about getting more talented tech people on board at CannaBuild. And MassRoots is following a similar path.

"There’s so much talent right now," says Dan Hunt, an independent contractor for MassRoots. "There’s so many incredible folks and ambitious people in the startup tech community. So merging the marijuana and tech industries, two industries that are both booming, is really important, I think, to bring more talent into the field."

Hunt says bringing more tech and innovation into the marijuana industry will bring it more legitimacy. The Startup Competition is one way of doing that. The event is a good opportunity for new and established industry participants to form a network. The organizers have already lined up specific mentors, investors, and developers to attend, like the CEO of Dixie Elixirs, a marijuana-edibles company, Boston-based Dutchess Capital Management, and The ArcView Group.

So far, response to the event has been strong, taking the organizers by surprise. In the end, they expect 150 to 200 people to attend the event, which they are pushing through the event management site Eventbrite.

"This is definitely the first—to our knowledge, and we’ve done extensive research—of an actual hackathon with prizes, similar to a mini-TechCrunch Disrupt event," says Marburger. "This is an opportunity to put a professional face on the marijuana industry."

Marburger’s CannaBuild will make the API of its very first app available to the hackathoners. The app, called Whaxy, brings information over all of the market’s available strains, edibles, and concentrations together into one place. Leafly has a similar API, but it doesn’t give developers access to as comprehensive of a dataset as Whaxy’s API will provide. CannaBuild will formally release Whaxy in September.

The original online resource for the marijuana world is the digital content portal Marijuana.com Started as a forum in 1996, it has become the standard, informational news site for the industry.

"[Marijuana.com] provides the availability, the content, and utility for anybody, whether it be a mom in her fifties or sixties or whether it be first-time users who are just now considering enjoying it, or if they’re prescribed it, ideally as part of a treatment for you name it," Katherine Smith, the chief marketing office of Weedmaps, says.

Both Marburger and Hunt think the projects that will come out of the Marijuana Tech Startup Competition can keep adding to the already available resources on the web, expanding upon the sites and apps that are out there. They say more targeted resources need to reach medicinal and recreational users, more than a generalized site like Marijuana.com provides.

The Growing Industry

New businesses are springing up in Colorado and Washington state, where recreational marijuana is legal—things from edibles to delivery services. Increasingly more states are legalizing the sale of marijuana, either for medical or recreational use, or both. Legal recreational pot sales began in Seattle in July, and altogether, 22 states and Washington, D.C., allow either medical or recreational marijuana sales.

The marijuana industry is worth several billion dollars, and investors are ready to shell out money. The ArcView Group is a notable investor in the field. It has invested in 17 different marijuana-centered companies, with more than $12 million. The investment group exclusively funds businesses that operate in the marijuana industry.

The venture capital firm the Ghost Group has backed Marijuana.com, along with the long-standing online dispensary listing and review site, Weedmaps, and a bunch of other marijuana-related online brands, since 2007.

"This is a proven market. We know people want to buy it," says Hunt.

The people who have gotten into the industry up until now have made big career changes; they aren’t the stereotypical potheads. Smith only came to the industry this past July after holding digital marketing and branding positions at Microsoft and Petco.

Smith sympathizes with marijuana’s medical benefits, explaining her willingness to switch into the marijuana industry. Smith’s mother had an injury that she used medical marijuana to cope with. Her father was a Vietnam vet who used medicinal marijuana to treat PTSD. But she didn’t try marijuana until college.

And she notices that, lately, she’s been calling and doing business with dispensaries whose owners are women. These women-led dispensaries show up in increasing numbers on Weedmaps’ site.

"Weedmaps is bringing on more and more smart business women everyday," says Smith.

Marburger would agree, saying that the marijuana industry is important for women. "In cannabis, some of the people that have made the most progress, for whatever reason, have happened to be women," he says.

The field is ready for more of this talent, and both MassRoots and CannaBuild are aggressive about finding the best. A big part of growing the field will rely on attracting newcomers to relocate to Denver.

"A lot of us left other secure jobs, if you will, in traditional enterprise, tech, and marketing to work in cannabis, and that’s inherently risky, just because it’s new," says Marburger. He hopes the tech startup competition will convince more people from the tech world that there are sound businesses there to get involved with.

Legitimacy

Earlier in August, the entrepreneurship nonprofit UP Global asked MassRoots and CannaBuild to change the Marijuana Tech Startup Competition’s name. The organizers had originally called the event the Marijuana Tech Startup Weekend, but it turned out that UP Global held the trademark on the term "Startup Weekend." A spokesperson for UP Global told The Denver Post that her organization, which produces events all over the world, couldn’t associate itself with the pot-tech event.

Getting people to respect the marijuana industry seems like a gargantuan task. Stories of dispensaries in California and Colorado shutting down make it seem like all dispensaries are running illegally. More often than not, these dispensaries just have trouble complying with new record-keeping requirements in these states to keep their business licenses live.

When marijuana dispensaries get shut down, it sends a mixed message to the public about the industry. On the one hand, selling is legal on the state level. On the other hand, it is illegal on the federal level, so dispensaries cannot access the federal banking system. Customers pay in cash, and cash-based transactions are vulnerable to local investigations, if they aren’t documented in a specific way. While there are people across the country who have a positive interest in the marijuana industry, getting involved in the business if you are not based in a state that has legalized it is a tricky proposition.

"We have a lot of out-of-state attendees who want to be involved in cannabis tech, but it’s really hard to build a product for a part of the country that arrests people for something that we’re legally building products for," says Marburger.

Weedmaps’ Smith believes that the marijuana industry should stress its agricultural roots to boost its image. "I think people are understanding that this is an agro business. This is a crop. It can be controlled," she says.

Marburger and Hunt believe the Marijuana Tech Startup Competition is just the beginning for using technology to better inform the general public and active marijuana users about the market. Technology has the ability to bring tons of information together in a structured way, and that includes data about cannabis. Eventually, these tech products can help everyone make better decisions about how to approach and form opinions about the marijuana industry.

"The more educational tools we get out there, the better," says Hunt.




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