Agrisoft Development Group, LLC – Kansas City
The speed of cannabis legalization caught a lot of America off-guard. One Kansas City firm, however, saw it coming and launched a seed-to-sale tracking software that keeps cannabis dispensaries, cultivation sites and marijuana-infused products (MIPS) profitable and transparent, in full compliance with state regulations.
Although still illegal — cannabis is technically a Schedule I Controlled Substance just like heroin, LSD and ecstasy — 20 states and the District of Columbia have effectively decriminalized medical use, seemingly overnight. Washington and Colorado have gone even further, effectively decriminalizing recreational, regulated adult use.
The key word here is regulated.
Every state wants to do it right, to fill recession-depleted coffers and keep cannabis and MIPs (soft drinks, chocolates, mints, drops) out of the black market and the hands of children. The incentive to get it right is very, very strong. Some estimates place the industry at more than $100 billion a year. Washington currently imposes collective cannabis taxes of more than 40 percent, not including sales tax. That’s a lot of incentive.
Some entrepreneurs have been watching this crawl to legalization intently for years.
One, Agrisoft Development Group, LLC’s CEO Charles Ramsey, a cannabis software control firm with headquarters on Main Street in Kansas City, was then CEO of a healthcare software company. Ramsey was watching a 60 Minutes rebroadcast that featured veteran liquor, tobacco and gaming enforcement officer Matt Cook. Cook wrote Colorado’s medical cannabis statute and was in very high demand with media, dozens of states and countries exploring similar legislation.
The interview confirmed what Ramsey and several members of his executive team had been thinking for some time: The cannabis industry was not only legit, it was poised for explosive growth. And unlike some fledgling industries, the industry also had no effective enterprise level software.
By the end of that week, Ramsey was in Denver meeting with Cook, touring medical marijuana dispensaries, brainstorming with Cook and his team on how to create an effective “seed to sale” system, tracking and logging every aspect of production from growing the plant to placing buds or finished products into the patient’s or users’ hands.
“Matt was impressed that we had built software for the medical industry,” Ramsey says. This is not an easy task, with stringent FDA and Health Insurance Portability and Accountability (HIPPA) approvals that have to be met. Cook was so impressed that he came aboard and is now Agrisoft’s COO.
Still, Ramsey didn’t want to strike out into unknown territory without adequate funding. He’s seen software companies rush into the cannabis industry with little more than enthusiasm and a shoestring budget, resulting in messy and ineffective software. The challenge was to understand every facet of the industry, fully develop the procedures into software modules and become very well-funded in a very short period of time.
To learn the industry, Ramsey embedded some of his best programmers in Colorado dispensaries to learn the industry from the inside out, working side by side with “budtenders” (a take-off on the term “bartenders”) to learn their procedures, existing systems and software and their deficiencies — “all their pains and frustration,” Ramsey says. “And after doing that for a number of months, we felt we had a solid enough knowledge database to build a better mousetrap.”
He undertook the same detailed, rigorous approach to financing.
Ramsey’s previous company had tapped Denise Fields, senior university industry relations officer, UMKC SBTDC, to help define management team roles and duties; craft a convincing business plan and define pre-market valuation to raise capital; form an advisory board; and meet other business needs.
Fields had connected Ramsey with PR and marketing consultant Lisa Stewart, now Agrisoft’s government and public relations liaison, to handle some of the firm’s communications needs. When Stewart began consulting for Agrisoft, she remembered the swift, accurate work Fields had done for the company and called Fields again to help develop the new firm’s business plan and fundraising strategy.
“Denise was great,” says Stewart. “She was always on call for me as I wrote proposals.”
Adds Ramsey, “Our relationship with Denise Fields has been important in our company’s early-stage development.”
Agrisoft’s Seed-to-Sale Software has impressed at least a dozen clients — dispensaries, cultivators and MIPs processors — enough to purchase the suite. And Stewart says Agrisoft has at least 30 other clients in the pipeline, including the government of Uruguay. Uruguay is the first country to legalize marijuana for all use, medicinal or recreational. It’s still technically illegal in the Netherlands, but cannabis laws are rarely enforced there.
Seed-to-Sale software combines a variety of modules to manage every conceivable aspect of cannabis production and sale, from radio-frequency identification (RFID) tags with bar codes that can track one or hundreds of plants from seedling to harvest to biometric budtender and other employee verification, verification of patient or user ID and intricate tax modules combining local, state and federal taxes.
Agrisoft is even finalizing software for a cannabis payment kiosk to verify ID and accept cash or credit cards. The solid, burly kiosk will safely and securely store cash and provide receipts for an industry awash in cash with no secure place to store it.
President Obama announced in February 2014 that he would allow the banking industry to finance and do business with marijuana sellers in states where it is legal, but banks have so far balked because marijuana remains a Schedule I substance. This leaves the industry with large amounts of cash lying around, leading to concerns about diversion, theft or simple human error.
And this is just the beginning.
“The industry, this movement, seems to be moving very rapidly across the globe,” says Ramsey. “And as this industry moves more heavily into the market, you’ll see a demand for more and more regulatory compliance.”
Will that regulatory compliance be called on anytime soon in the Show-Me State?
“Well, Missouri is a pretty red state,” Ramsey laughs. Still, legislation to allow adult, medicinal use has been consistently introduced by state representatives and senators for the past few years, with legislation on the floor now. There’s even a group called Show-Me Cannabis currently seeking approval for a voter initiative from the Missouri Secretary of State for the November 2014 election to create an amendment to the state constitution allowing marijuana to be legal and regulated for adult, medical use.
Couldn’t happen here? It has in 20 states so far, with at least a dozen other states considering it.
The fact is that many states are still recovering from the recession and are broke or near-broke. And marijuana products represent an enormous, untapped revenue stream, provided it’s regulated properly.
“States want to do it right, approve it then follow a stringent regulatory structure,” Ramsey says. “And once approved, these states will be up and ready to go with our software.” Ramsey adds that he doesn’t think the federal government will interfere.
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