In this edition of "Rising High," The Fly conducted an exclusive interview with Jessica Billingsley, chief executive officer of Akerna (KERN), a Colorado-based cannabis compliance technology provider. Here are some of the highlights:
CANNABIS COMPLIANCE: Akerna is a global cannabis compliance technology company with offerings including MJ Platform, Leaf Data Systems, solo sciences technology and Ample Organics. Billingsley said she went into cannabis compliance after investing in a Colorado cannabis operator and being unable to find a software that met the unique needs of cannabis. “I just felt very strongly that people wanted to know what they were getting in their cannabis products and that I had the expertise, the skill set and the background to provide the technology.” The company provides value to clients in a few ways, Billingsley said, the first being its enterprise resource planning product MJ Platform. The platform is “built specifically for cannabis to support transparency and accountability at scale in a rapidly growing market,” she said, adding, “For clients this means they have a solution that’s designed to meet their specific needs.” The CEO said Akerna also offers value through building technology that offers an “unprecedented” level of transparency and visibility to consumers. "People want to know what is in what they’re putting on and in their body,” she said. Billingsley added that compliance and public safety for governments is another way Akerna provides value. “Our Leaf Data System solution has been the tool of choice because it is the safest track and trade solution on the market and also allows us to leverage our rich data set to provide insights to regulators so they can more effectively leverage their resources.”
ACQUISITIONS AND DEALS: Billingsley said Akerna executes a strategy to pursue highly-targeted, complementary businesses that help Akerna scale and enhance the company’s growth prospects. The CEO noted the company’s recent acquisition of solo sciences, which gives Akerna greater access to the consumer market and the ability to deliver a technology solution that improves consumer safety and product confidence with solo*CODE. “What’s important about the solo*CODE technology is that it surpasses what you might think of as legacy authentication tools,” she said. “Each solo*CODE is like a unique fingerprint for every package.” Billingsley said consumers can use the solo app to scan the code to confirm the authenticity of a product. Additionally in December, the company announced the acquisition of Ample Organics, a provider of seed-to-sale tracking for Canadian cannabis businesses. “Canada is the first and only G7 country to have legal cannabis at the federal level and as such we expect it to serve as the template for other countries looking to legalize,” she said. “When we close, Akerna will have a significant advantage as we accelerate on our vision.”
EXPANSION: Within the last year, Akerna expanded to clients in Italy and Macedonia as well as opened a Colombia office and Billingsley said the company will absolutely continue to expand. The CEO said she has been touting the importance of globalization for many years and noted to date 37 countries have legalized cannabis in some form. “From our perspective we grew our global client base to support those countries,” she said. “We stand ready to be a proven partner as the world reaches to embrace cannabis and they want to implement proven accountability and tracking solutions.” Billingsley also said she predicts that Asia enters the market in 2020 giving Latin America and Africa a run for their money. “Thailand has recently legalized medical cannabis and has begun establishing a regulatory framework,” she said. “I think we’re some years away from seeing true regional varieties available for purchase locally like your South American, Costa Rican, Ethiopian or Asian coffee. I do predict we’re seeing the foundational regulations and export paths to be established for that future for cannabis.”
CHALLENGES: When asked about the biggest challenges facing the industry, the CEO noted the lack of a fair tax policy in the U.S., the lack of sensible banking and the need for social justice. In regard to the tax policy, Billingsley said the 280E tax provision was originally intended to apply to illegal drug dealers but now applies primarily to legal cannabis operators. “For businesses it can change the effective tax rate from what is generally closer to 30% to what is more like an effective tax rate to closer to 70%,” she said. The CEO added she also sees a challenge in the lack of sensible banking as the SAFE Act is pending. “Although it passed its first hurdle with an overwhelming majority, it’s a bit stagnated currently," she said. The CEO noted that she has seen a change in sentiment from congressional members over time and she believes representatives are making a concerted effort to figure out banking services, tax policy and the scheduling issue. In addition, Billingsley said social justice and equity in the industry represents another hurdle. “Overall arrest rates are dropping but racial disparities remain,” she said. “We really need to ensure that as we’re creating a legal, vibrant, functioning industry, we’re providing opportunities to those who are most impacted by the harmful war on drugs policies.”
OPPORTUNITIES: As the cannabis space develops, Billingsley said she sees industry opportunities in additional cannabinoids, data as currency and hemp business expansion. The CEO said she sees cannabis going beyond CBD and THC considering there are over 400 identified compounds in cannabis. “My outlook is that we’re still in the early stages of commercialization, educating the public, introducing new products and marketing legal cannabis,” she said. Billingsley added she also expects data to become the new cannabis currency as the industry matures. Real data, which has been available for other traditional consumer packaged goods industries, has been hard to obtain for cannabis businesses, she said, but as the industry reaches scale, more professionals will demand rich data. “Being able to supply rich data to the full supply chain through, to and including the consumer becomes critical to stakeholders looking to make the right decision,” she said. “Our MJ Market Data has launched to meet this need for rich, meaningful data to inform business, investment and regulation.” Lastly, the CEO said she sees hemp businesses expanding beyond CBD extraction as one of the biggest opportunities. “Hemp is an incredibly valuable and versatile product so I think we’re going to see saturation in the hemp CBD extraction space,” she said.
SHAREHOLDER ALIGNMENT: Billingsley noted that she is a significant shareholder in Akerna and therefore her goals are very much aligned with those of the shareholders. “Going forward as we continue to execute on our growth plan complemented by the strategic acquisitions, we’ll also continue to invest and advance our platform and all of this is focused on creating value for our shareholders,” she said.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), Delta 9 (VRNDF), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), General Cannabis (CANN), Greenlane (GNLN), GrowGeneration (GRWG), Harborside (HSDEF), Hemp Inc. (HEMP), Hexo (HEXO), India Globalization Capital (IGC), Indiva (NDVAF), ICC International Cannabis (WLDCF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen Enterprises (MMNFF), MJardin (MJARF), Organigram (OGI), Origin House (ORHOF), Planet 13 Holdings (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Westleaf (WSLFF) and Zynerba (ZYNE).
Akerna
-0.16 (-2.23%)
APHA
+
Aurora Cannabis
+0.09 (+5.17%)
CV Sciences
+ (+0.00%)
CannTrust
+0.03 (+2.91%)
Canopy Growth
+0.59 (+2.93%)
Cronos Group
+0.39 (+5.87%)
Trulieve Cannabis
+ (+0.00%)
IGC Pharma
+0.0099 (+1.55%)
Trees Corporation
+ (+0.00%)
ZYNE
+
Tilray
+0.295 (+1.87%)