Akerna CEO Jessica Billingsley Discusses Acquisition of 365 Cannabis

By Jarrett Banks

Akerna Corp (Nasdaq: KERN) has agreed to acquire 365 Cannabis, a cannabis business management software system built on Microsoft Corp.’s Dynamics 365 Business Central, in a $17 million deal.

Exec Edge sat down with Akerna CEO Jessica Billingsley to find out more.

Exec Edge: Can you tell us about the acquisition and its terms?

On September 13th, we announced our plans to acquire 365 Cannabis, a cannabis business management software system built on Microsoft’s Dynamics 365 Business Central, in a $17 million deal at 2.1x Last 12 months revenue.

365 began as a Microsoft Dynamics system integrator serving a multitude of industries and entered the cannabis industry in 2016 with their first flagship client. Today, 365 Cannabis is a Microsoft Gold Partner. It services a client base comprised of leading U.S.-based MSOs and single-state operators, and Canadian LPs, in addition to global cannabis clients outside North America.

Like Akerna, 365 Cannabis uses open APIs to integrate with some of the best-known strategic partners in the industry. By leveraging Business Central, 365 developed a multi-tenant ERP solution incorporating a wide range of functionality including Cultivation, Distribution, Retail, Financials, CRM, and Payroll, to name a few.

As a result of the acquisition, 365 Cannabis’ clients will gain access to Akerna’s Compliance Gateway, feature-rich reporting tools, our MJ Retail POS offering, and our recently launched Akerna Connect, a platform allowing for digital marketing through text messaging and loyalty programs.

Exec Edge: Why 365 Cannabis – what made them more attractive than others?

Over the past few years, there has been a substantial positive change in the political and social climate surrounding the cannabis industry, which has seen continued growth in revenue, new markets, and consumers. As new markets are added, and the possibility of US federal reform increases, cannabis operators in existing markets are looking to expand their operations both vertically and horizontally by opening locations in new states. As these businesses grow and the complexity of their operations expands, they increasingly require comprehensive enterprise planning (ERP) systems that can scale with them as they grow, from startup to enterprise, while simultaneously meeting multistate compliance.

When it comes to financials and tax planning, the spreadsheet solutions and entry level accounting systems like Quickbooks that enabled many businesses to reach their first thousand in revenue will not scale when the business grows by orders of magnitude, causing these cannabis operators to seek a range of financial and tax planning offerings.

By acquiring 365 Cannabis, Akerna now offers Microsoft capabilities, rounding out our portfolio of leading integrated financial and tax planning tools. We provide cannabis businesses a solution for each stage of their growth, from startup to multistate operator (MSO), while maintaining regulatory compliance throughout every step. This is of particular importance to the cannabis industry as the Microsoft Dynamics 365 Business Central offering has been gaining wide acceptance with small to mid-size organizations, representing the scale of many of the MSOs in existence today. As these companies look to take the next step in their IT evolution and move beyond spreadsheets and the Office 365 product suite, including Word and Excel, to more robust enterprise software solutions, Microsoft becomes a natural choice.

In addition to Microsoft, Akerna offers SAP, Oracle’s Netsuite, Sage Intacct, and other leading providers, further establishing Akerna as the only cannabis-compliant ERP system offering the complete portfolio of mainstream tax and financials.

In adding 365 Cannabis to the Akerna family, we further realize our scaled advantage in leveraging our compliance gateway and ecosystem of integrations while offering our clients a choice between all of the most popular financial and tax planning systems.

365 Cannabis is a well-developed cannabis solution with over 85 cannabis clients across the US, Canada and further.

Exec Edge: You’ve mentioned the Akerna compliance gateway a few times – can you explain that for the non-tech/cannabis readers?

By Gartner definition, A B2B compliance gateway is a business-to-business software concept used to consolidate and centralize data, process integration, and interoperability between a company’s internal applications and systems and external entities such as business partners or software as a service (SaaS).

Because cannabis is a regulated substance, remaining compliant is crucial to business longevity. Unfortunately, compliance isn’t a one-size-fits-all thing in the cannabis industry. Laws change significantly from one state to the next, and even within different counties in those states, further complicating compliant operation.

To ensure they meet those strict compliance regulations, cannabis businesses turn to software to perform these regulatory checks. Many states and markets have mandated that cannabis businesses run software with seed-to-sale compliance tracking, like Akerna, to ensure plant and product safety. Akerna’s compliance gateway is where we house all of that varying, confusing regulatory information.

Essentially, Akerna’s compliance gateway is the bridge connecting our ecosystem, where regulatory data from all our internal applications and systems lives, to our clients who want to access that data. Akerna’s compliance gateway guarantees compliance for our clients.

Compliance is table stakes for the cannabis industry. Without it, your business will likely lose its license to operate.

By solving compliance efficiently across all our Akerna products, we have a scaled advantage over our competitors.

Exec Edge: What about Akerna’s ecosystem?

At Akerna, we have prioritized creating an ecosystem of cannabis technology products and integrations that will grow with cannabis businesses, from the day they apply for a cannabis business license, to when they open the door for their first customer, to becoming an MSO, and, eventually, becoming a global brand. As our clients scale, they rely on different tools and integrations to propel that growth.

There is a multitude of tools and integrations that complete our ecosystem. We offer leading seed-to-sale and track and trace solutions, including MJ Platform, Ample Organics (Canada), Leaf Data Systems (government solution), and Viridian Sciences, as well as Trellis, a cultivation management platform, and solo sciences, a leader of patented anti-counterfeiting and consumer engagement technologies.

In addition to these solutions, we have developed internal services and products that answer direct needs and asks from our clients and hopeful cannabis entrepreneurs.

In partnership with Domo, we launched MJ Analytics last year, which offers a suite of enterprise-level data tools, providing users with unparalleled access and insight into the cannabis supply chain, from seed to sale. By leveraging Domo’s cloud-based BI intelligence systems, MJ Analytics makes it easier for operators to run their business by allowing users to perform self-serve analytics on fresh data that can help drive everyday decisions.

Just after that, we deployed MJ Retail, our POS software technology designed to provide merchants and consumers with a flexible and mobile-friendly experience. With MJ Retail, dispensaries can accelerate and streamline customer checkout, and transactions can be completed at any time throughout the retail experience on any device.

Last month, we announced our latest offering, Akerna Connect, an eCommerce software that provides a suite of digital marketing tools to retailers and dispensaries to reach their consumers and enhance the shopping experience through online ordering, loyalty programs, and text messaging. Akerna Connect allows dispensaries to convert more sales, increase customer engagement and remain competitive.

It’s also important to note our team of consultants, who work with hopeful cannabis entrepreneurs to win a license, build, set up, open, operate, and scale their cannabis business.

On top of all of our Akerna-owned software and offerings, we partner and integrate with over 80 different businesses and functions, ranging from payments, shopping, eCommerce, and more. We are able to offer this level of integration through our robust ecosystem powered by Open APIs (Application Programming Interface), which means any business can integrate into ours via specific endpoints in our partner portal, taking out the timely and laborious process of re-writing code.

Many other cannabis ERP providers do not offer an open API, meaning it is up to the ERP provider to decide what outside software their clients can use and often restricts the clients from tools they want.

By offering access to Akerna’s ecosystem through our partner portal and open APIs, we give our clients the liberty to choose customized integrations and partnerships to meet their specific needs while minimizing the backend work.

To paint it in more layman terms, I like to compare Akerna to buying a home. First, you choose where to live based on what suits the needs of you and your family. This would be comparable to selecting your main seed to sale software, such as MJ Platform. From there, you would identify the added features you want in your home – appliances, lighting fixtures, etc. Those features would be selected from the ecosystem, a collection of other things you want to make your house a home, or integrations that support your software. Then, the safety part of it. You have to ensure your new house is up to code, has the correct alarms, etc. That home safety is comparable to compliance in the cannabis industry.

The Akerna ecosystem offers flexibility for our clients to choose customized integrations and partnerships to meet their specific needs, throughout all growth cycles, while remaining compliant and minimizing the backend work.

Contact:

Jarrett Banks, Editor-at-Large

jb@capmarketsmedia.com

Twitter: @Exec_Edge

Share this article:

This post was originally published here.