On Thursday, June 20, Akerna Corp. (NASDAQ: KERN) rang the closing bell at the NASDAQ MarketSite tower in New York City. Akerna is the first U.S.-based cannabis compliance and seed-to-sale tracking technology company to trade on the Nasdaq, marking a huge leap forward in the legitimization of a legalized cannabis industry. It is also the first female-led company in the cannabis space to list on the Nasdaq.
“We listed on the NASDAQ just two days ago and believe we are well positioned to realize our vision to connect businesses with data and consumers with information which will modernize and propel the cannabis industry forward,” said Akerna CEO Jessica Billingsley on Thursday before ringing the closing bell.
Becoming the first woman-led, cannabis compliance firm to list on the NASDAQ is no easy task. As the cannabis industry continues to grow, many worry that it will fall into the same corporate patterns as other companies and industries. Tahira Rehmatullah, the Executive Director of Hypur Ventures and the CFO of MTech Acquisition, sits on the board at Akerna. She pointed out in a recent interview that the cannabis industry “must do better” when it comes to diversity and the community.
“We continue to fall into similar patterns established by other industries, like allowing for predominantly male leadership, overlooking diversity, and ignoring the negative impact that the latest “gold rush” can have on communities that have paved the way,” Rehmatullah told Jessica Steinberg on Monday.
In a move that counteracts the comfortable corporate structures new companies can fall into these days, MTech Acquisition merged with MJ Freeway to form the newly listed Akerna Corp. last week, on Monday, June 17. Adding Rehmatullah to Akerna’s Board of Directors was part of the merger agreement, and it puts Akerna on a list with other top-tier cannabis companies looking to make a name for themselves in this competitive industry. Akerna continues to stand out because it is a technology firm with women in executive-level positions that just also happens to be rooted in cannabis.
MJ Freeway was founded in 2010 with the cannabis industry in mind. It uses a patented ERP platform to track cannabis from seed to sale and uses Leaf Data Systems technology to help governments, cultivators, and retail owners track their cannabis. Before the merger, MJ Freeway was working with over twenty compliance contracts in the United States. Since then, Akerna now operates in 29 legalized states, tracking over $13 billion worth of cannabis sales and is expanding to serve markets across North America, Africa, Australia, Europe, and New Zealand. And despite facing off with hackers and server outages in 2017, Akerna continues to remain optimistic about their future growth.
“As legalization of cannabis expands across the world, we believe it is imperative that businesses, patients, consumers, and governments have the tracking and compliance technology they need to make informed decisions and comply with applicable regulations,” Billingsley said last Monday. “We believe Akerna is well suited to meet these needs with the ability to scale rapidly across the world and offer a robust and innovative platform for growing industry demands.”
Akerna’s launch onto the Nasdaq is a huge step forward when it comes to diversity in both the cannabis and technology spheres, but investors should wait before putting all of their proverbial eggs into one hi-tech basket. Akerna may have bypassed the IPO process by merging with a SPAC like MTech, but the pot stock only reported $10 million in revenue for 2018. While that amount is nothing to scoff at, it is chump change when investors take a look at other pot stocks playing the game. Akerna may have goals to become the go-to cannabis compliance firm of the future, but it is too soon to tell where this market will actually take them.
Investors looking for a new cannabis technology company for their portfolio should keep their eye on Akerna, but do not make any fast moves just yet. The coming months will give this diverse company the chance to stretch their leadership legs, build their reputation, and ultimately prove that it can be the cannabis tech giant it wants to be. From our perspective, their positioning looks promising, especially as the U.S. government gets closer and closer to potentially legalizing cannabis at the federal level. If investors can be patient for a few months while Akerna proves itself, the wait just might be worth it.