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Culture » Smoke Signals

Microsoft is Ready to Make Money From Weed

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It is often said that making money is one of the oldest highs. That might be the mantra of tech giant Microsoft, now peddling products ranging from PowerPoint to pot.

This week, Microsoft welcomed cannabis business compliance company KIND Financial to its Azure Government cloud platform. The pioneering, Seattle-based company becomes the first major tech company to participate in the newly-legal cannabis industry, a move that industry insiders are calling "legitimizing" for the cannabis business.

KIND Financial specializes in software systems for what is known in the industry as "seed-to-sale tracking." Laws in each cannabis-legal state require cannabis companies to track and report on all plants and products. The system is at the core of cannabis regulatory systems, allowing government officials to track products, determine compliance with production limits, calculate taxes, and issue product recalls. Microsoft's Azure Government cloud platform includes security and compliance protocols designed for interacting with federal agencies.

KIND and Microsoft will compete in the market with a startup known as BioTrackTHC, which has signed contracts with five states, including Washington, New Mexico, Illinois, Hawaii and New York. A third competitor, Metrc, has contracts in place with state governments in Alaska and Oregon. BioTrackTHC's revenue increased by 75 percent last year, and the market for tracking software and services appears poised to grow significantly.

Medical marijuana is now legal in half of US states, and five more states are expected to vote this year on joining the existing four states allowing so-called recreational cannabis sales. Nationwide, cannabis sales stood at $5.7 billion for 2015, and are expected to reach $22 billion by 2020. "We do think there will be significant growth," said Kimberly Nelson, Microsoft's executive director of state and local government solutions.

Nelson called the cannabis business "...an entirely new field" for Microsoft. "As the industry is regulated, there will be more transactions, and we believe there will be more sophisticated requirements and tools down the road," she said. Analysts say Microsoft is looking to move in a new direction as revenues from the personal computer industry shrink. With California expected to fully legalize cannabis this fall and a Merkeley-Murray bill to allow major banks to provide services to cannabis businesses headed for a vote in the US Senate, perhaps Silicon Valley-based giants Google and Amazon will be the next tech titans to enter the cannabis industry.

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