Cannabis, going public and women in tech: Inside IR at MJ Freeway
If ever an industry was all about growth, it was the budding cannabis industry. Decriminalized in Canada in October 2018, while it remains federally illegal in the US, state regulations have relaxed in recent years, with residents in 10 states and the District of Columbia now allowed to possess recreational cannabis. And investors have been buying up stock.
Speaking to IR Magazine last month, Marc Lakmaaker, vice president of investor relations at Aurora Cannabis, explained that the company’s market cap has grown from around C$60 mn to C$12 bn (from $45 mn to $9 bn) since he started working for the company in November 2017. And last week IR Magazine editor Ben Ashwell reported on KCSA findings that cannabis stocks are increasingly luring retail investors away from other sectors.
Gradual deregulation isn’t just allowing growers to go public, though. It has also given rise to a host of other companies that bring everything from consultation services designed to help fledgling firms navigate the licensing requirements to offering technology that allows seeds to be tracked and traced – all helping bring rules and respectability to the industry.
One such company is MJ Freeway. Here, Jessica Billingsley, co-founder and CEO, tells IR Magazine why she got into the business, why she’s passionate about promoting female representation in the tech industry and how things have changed for the cannabis industry since she launched the firm in 2010.
As part of a new wave of companies taking advantage of the deregulation of cannabis, can you sum up exactly what your company does?
MJ Freeway launched nine years ago as the cannabis industry’s technological backbone. Our software provides seed-to-sale tracking, which enables users to capture every touchpoint from when the seed is planted through cultivation, manufacturing, distribution and sales.
Our government regulatory compliance product, Leaf Data Systems, provides comprehensive track-and-trace software for state regulators to support compliance and product safety. Additionally, we provide business consulting services to guide organizations through the multiple layers of licenses and regulations associated with getting a cannabis operation off the ground. To date, we have tracked $15 bn in sales for our clients in 13 countries.
Can you tell me a bit about your background and what you did before setting up MJ Freeway?
There are two chief reasons why people dive into this industry. They are either passionate believers in the efficacy of cannabis, or adventure seekers excited to claim new territory. I consider myself an adventure seeker, although I rapidly became a true believer as well.
I was one of three women on my college computer science program. From there, I launched my first entrepreneurial adventure in technology at age 22. I later saw an opportunity and invested in one of the initial Colorado cannabis licenses – that’s where I recognized the link between my computer science expertise and the emerging cannabis market. The industry had a need to monitor, manage and report effectively and accurately on this unique product, so MJ Freeway was born in January 2010. We believe transparency across the supply chain facilitates the global growth and sustainability of the cannabis industry.
As a private company preparing a Special Purpose Acquisition Company listing, what form do your IR activities currently take and how do you see that evolving over the next few years?
There’s no silver bullet when it comes to meeting investors, so I’ve presented at conferences, virtual events and one-on-one meetings. Collectively, we’ve also leveraged networks and business connections. While several cannabis companies are publicly traded, we will be one of a handful traded on a major US exchange and we believe we’ll be the only cannabis technology sector company on Nasdaq.
Through a merger announced last year, MJ Freeway will become part of a holding company that will list on Nasdaq. Where are your efforts and resources focused as you build up to going public and how do you expect those to shift post-listing?
The MJ Freeway mission is to positively impact lives, so we’re laser-focused on providing the most valuable cannabis tech product for our clients, with measurable return on investment. We say if your technology doesn’t give you more value back in operational efficiencies and capitalized opportunities, you need new software.
Post-merger, we will continue to drive industry innovation in cannabis business technology while simultaneously launching Akerna, our parent holding company. With Akerna, we expect to drive powerful and sustainable industry growth through consolidation, connecting every cannabis tech touchpoint under a single umbrella. The holding company approach gives us flexibility to acquire diverse technology companies and link them together.
What are some of the top issues you discuss with investors or potential investors and how have those evolved in recent years as the cannabis sector has grown?
For years, the conversation focused on how big the market for cannabis could actually be and how certain we were that it would continue to grow and not be shut down. Today, most regulators tell us we are on the ‘right side of cannabis history’ and most conversations revolve around go-to-market and growth sector opportunities, as well as how we view emerging markets.
What has been your biggest challenge in the role so far?
I started in the industry at its inception, back when it was more Wild West than Wall Street. Fairly easy processes in standard business operations came with major hurdles in cannabis. We had issues securing bank accounts, obtaining merchant processing and getting insurance. All these industries are heavily tied to the federal government, so there was an inherent concern in having us as customers. There were also perception issues and challenges raising initial capital due to our association with cannabis.
And your highlight?
Seed-to-sale tracking, industry enterprise resource planning, that a cannabis ancillary company could be traded on Nasdaq… none of this was even a consideration 10 years ago. We created it. I built an amazing team to drive innovative solutions and solve our clients’ problems. We started with a handful of team members; now MJ Freeway has grown to more than 100-strong.
If you had unlimited resources, what would you like to spend more money or time on?
I am fiercely committed to stopping the drop in talented women in tech and would certainly commit more resources – both time and money – to driving change. More than half (56 percent) of women who enter the industry drop out of the workforce midway into their careers. Right now, there’s a smaller percentage of women in tech than there was 25 years ago, and it is almost exclusively men who design the technologies we are glued to every day. If left unattended, society will miss opportunities for innovation, and we will never see parity in leadership. Generating creative solutions to support women in tech is a win for all.
Finally, when the time comes to appoint a dedicated IR professional to the company, what will you be looking for in that person?
The strongest deciding factor for any new team members is the fit. Do they align with our core values? Do they connect with our mission and demonstrate it in their lives? Do they uphold the same commitment to transparency and quality? There are some aspects of a candidate that can’t be captured on a resumé or CV.