David Dinenberg, the founder and chief executive of Kind: “Every business that works in the cannabis space, we all clamor for legitimacy.” Photography by Elizabeth Lippman for New York Times
Washington-state’s own (where it’s legal to sell cannabis), Microsoft is turning green by aligning itself with the cannabis community with their venture into the business with cannabis financing software startup called “Kind” that tracks cannabis plants from “seed to sale”, according to the New York Times.
The software — a new product in Microsoft’s cloud computing business — is meant to help states that have legalized the medical or recreational use of marijuana keep tabs on sales and commerce, ensuring that they remain in the daylight of legality.
So far, only a handful of smaller banks are willing to offer accounts to companies that grow or sell cannabis, and Microsoft will not be touching that part of the business. But the company’s entry into the government compliance side of the business suggests the beginning of a legitimate infrastructure for an industry that has been growing fast and attracting lots of attention, both good and bad.
“We do think there will be significant growth,” said Kimberly Nelson, the executive director of state and local government solutions at 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.”
Los Angeles start-up, Kind, that built the software the tech giant will begin marketing. Kind — one of many small companies trying to take the marijuana business mainstream — offers a range of products, including A.T.M.-style kiosks that facilitate cannabis sales, working through some of the state-chartered banks that are comfortable with such customers.
Microsoft will not be getting anywhere near these kiosks or the actual plants. Rather, it will be working with Kind’s “government solutions” division, offering software only to state and local governments that are trying to build compliance systems.
But for the young and eager legalized cannabis industry, Microsoft’s willingness to attach its name to any part of the business is a big step forward.
“Nobody has really come out of the closet, if you will,” said Matthew A. Karnes, the founder of Green Wave Advisors, which provides data and analysis of the marijuana business. “It’s very telling that a company of this caliber is taking the risk of coming out and engaging with a company that is focused on the cannabis business.”
David Dinenberg, the founder and chief executive of Kind, said it had taken a long time — and a lot of courting of big-name companies — to persuade the first one to get on board.
“Every business that works in the cannabis space, we all clamor for legitimacy,” said Mr. Dinenberg, a former real estate developer in Philadelphia who moved to California to start Kind. “I would like to think that this is the first of many dominoes to fall.”
It’s hard to know if other corporate giants have provided their services in more quiet ways to cannabis purveyors. New York State, for instance, has said it is working with Oracle to track medicinal marijuana patients. But there appears to be little precedent for a big company advertising its work in the space. It is still possible — though considered unlikely — that the federal government could decide to crack down on the legalization movement in the states.
The partnership with Kind is yet another bold step for Microsoft as its looks to replace the revenue from its fading desktop software business. On Monday, it announced that it was buying LinkedIn.
Governments, too, have generally been relying on smaller start-ups to help develop technology that can track marijuana plants and sales. A Florida software company, BioTrackTHC, is helping Washington State, New Mexico and Illinois monitor the marijuana trade inside their states.
Kind has no state contracts. But it has already applied, with Microsoft, to provide its software to Puerto Rico, which legalized marijuana for medical purposes earlier this year.
Twenty-five states have now legalized marijuana in some form or another, with Pennsylvania and Ohio the most recent. The biggest business opportunity, though, will come from states that allow recreational use of the drug, as Colorado, Oregon and Washington already do.
This fall, five states — including, most significantly, California — will vote on whether to join that club.
Ms. Nelson of Microsoft said that initially her company would be marketing the Kind software at conferences for government employees, but it could eventually also be attending the cannabis events where Kind is already a regular presence.
“This is an entirely new field for us,” she said. “We would have to figure out which conference might be the premier conference in this space. That’s not outside the realm of possibility.”