Cannabis Software Stack: Who Leads the Transactional Software Sector?

What does the Transactional sector of the cannabis software market look like, and which company is the market leader in 2020? Cannabiz Media dove into the data in the Cannabiz Media License Database and shared the answers to those questions and more in the Cannabis Software Stack report last month.

Two weeks ago, I launched a new series of articles where I’m sharing more of the details from that report and diving into the cannabis software stack and license opportunity based on each software sector. In the first article in this series, I shared details about the Back Office sector while last week we reviewed the Activity sector.

This week, we’ll take another close look at the report data and see what the Cannabiz Media research team learned about the Transactional sector.

Defining the License Opportunity in Each State

The Cannabiz Media team found 332 unique companies that connect to METRC or Leaf Data Services in Washington, and using the Cannabiz Media License Database, we determined how many licenses they can connect to in those states (i.e., the “license opportunity” or potential addressable market in a state).

To determine this license opportunity, we added Active, Pending, and Applied licenses for the appropriate activity. For example, to come up with the license opportunity for point-of-sale software, we included Active, Pending, and Applied dispensaries and retailers.

The Transactional Sector is comprised of 28 companies. All the companies in this sector are involved with helping money move through the value chain as goods are purchased. They are referenced in the market map below between the Back Office and Activity Sectors.

cannabis software stack market map


We have included several key categories around transactions including financial institutions, payment processors, financial compliance companies, and marketplaces. All the companies in this sector are involved with money moving through the value chain.

  • We identified 28 active companies in the Transactional sector
  • They make 56 connections to 12 states
  • 14 of 28 (50%) connect in California
  • The Transactional sector is comprised of the following categories:

                • Financial Institutions

                • Payment Processors

                • Financial Compliance

                • Marketplaces

One interesting observation is that the companies in this sector do not connect to many states.  However, since each state is its own “sovereign” market, a market penetration strategy is probably the way to go.  Because commerce cannot cross state lines, the most effective approach may be to choose your states wisely and then work diligently to build market share and critical mass.

Cannabis software transactional sector leaderboard

Financial Institutions

We identified two financial institutions – one based in Massachusetts and the other in Michigan. Each is connected only to the state it is located in. Flagstar Bank is connected in Michigan with 552 potential licenses while Bristol County Savings Bank connects to METRC in Massachusetts with 917 potential licenses.

Payment Processing

Six companies were identified as Payment Processors. was the only one that connected to multiple states: California, Colorado, Nevada, and Oregon.

Financial Compliance

To help industry stakeholders remain compliant, we identified 10 companies in this space, though only five are in more than one state. California, Oregon, and Colorado account for 13 of the 22 connections (59%) for this category:


The largest Transactional category is Marketplace. Many firms have tried and failed to succeed in this space because bringing buyers and sellers together is such a compelling value proposition. However, building critical mass and market share are time consuming and expensive. We identified 10 firms but also had to exclude some that no longer appear to be in business.

The 10 marketplace vendors have 23 connections to 10 states. None of the 10 connect in Maine, Maryland, Missouri, or Louisiana but six connect in California and four to Oregon.

This is significant for firms that are in the business of bringing buyers and sellers together. Each vendor will want to sign up as many license holders as possible, but each license holder may only have so much bandwidth to implement and learn new systems.

Why This Information Matters

The information in our report is useful for a variety of stakeholders in the cannabis economy:

  • Regulators can gain insight into the size and scope of the software landscape and learn about many of the companies they may be working with.
  • Existing vendors can use the information for both competitive and business intelligence as well as to find future partners and acquisition candidates.
  • Investors can use it as a roster of potential acquisitions or partners for their portfolio companies.
  • Existing license holders can use it to gauge the footprint of software vendors. With this data, they can see which companies are one-state-wonders.

What’s Next?

Next week I’ll share my observations on the Advisory Sector which includes analytics firms and consultants, so stay tuned to the Cannabiz Media blog.

Cannabiz Media customers can stay up-to-date on these suppliers and other new licenses through our newsletters, alerts, and reports modules. Subscribe to our newsletter to receive these weekly reports delivered directly to your inbox. Or you can schedule a demo for more information on how to access the Cannabiz Media License Database and dive further into this data yourself.

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