Tech Companies and California’s Marijuana Legalization
California becomes largest single market for recreational pot and tech startups are developing ideas to explore this industry
Since 2012, when Colorado and Washington allowed recreational use of marijuana, the pot industry in the United States has been on a tear. Now 29 U.S. states and the District of Columbia have legalized medicinal marijuana. And in January of 2018 California allowed recreational pot sales. Given that the state’s GDP is larger than that of France, California has become the largest market for legal pot overnight, promising another major boost to the cannabis industry.
While the growth of the U.S. pot market owes fundamentally to consumer demand, part of the success owes to the use of technology in spreading access to it. Entrepreneurs have devised novel ways of crafting and distributing cannabis products by incorporating technology to its processes. Meanwhile, legal dispensaries being charted out on mobile apps eases the consumer search for the desired cannabis product.
The growth of the cannabis industry has gained the attention of venture capital. Privateer Holdings and other investment groups are among the largest cannabis-focused investment firms in the U.S. Casa Verde, a smaller VC, has sunk $500,000 in seed money to each of seven different U.S.-based startups that focus on the ancillary side of the booming pot business.
Overall, the size of the legal North American cannabis market stands at about $7.6 billion, and is expected to reach $22.6 billion by 2021.
Uruguay’s Budding Lead in Development of Cannabis Apps
In general, outsourcing software development to Latin America offers a spate of benefits to U.S.-based firms, especially startups. So-called ‘nearshoring’ relies on shared time zones, English proficiency, and cultural similarity to provide seamless outsourced technology solutions by Latin American providers for clients based in the United States.
Because the business cultures align, nearshore delivery offers synergies that many businesses are increasingly eager to seize. This in turn has allowed Latin America to grow from barely 3% of global services delivery a decade ago to over 13% in 2014, according to Frost & Sullivan.
As part of this alignment, nearshore firms have begun catering to niches, including the development of cannabis-related apps. Indeed, in recent months Uruguayan software firms have taken a lead in this, coupling their programming expertise with lessons that they have learned from Uruguay’s own experience having legalized the recreational use of marijuana in July of 2017. Besides, we have seen that startups that focus on innovative solutions can find great value by working with software partners that have experience developing MVPs, with a lean approach to validate ideas quickly.
In UruIT, for example, we are currently working on an ecommerce app to ease mobile payments for pot. Our client is a startup from San Francisco whose founders see California’s cannabis legalization process as an opportunity to connect users and providers through technology. Their goal is to launch the ecommerce app in the following weeks, since the recreational use of marijuana became legal in California this month.
To achieve this, a 3-developer team has spent the last four months developing the application in Colombia. React and Node are the main technologies we have relied on in development of the app. Through weekly feedback, and regular use of Scrum methodology, the developer team has smoothed out kinks, optimizing the apps performance based on the DevOps practices and unit testing.
If you are planning to develop an application in this industry and want to exchange some ideas, let me know! You can contact us in this link and we can continue to discuss the opportunities this industry offers.