First Look

How big a deal is Microsoft's foray into legal marijuana market?

The tech giant is set to help Kind Financial market software to help state and local authorities regulate the legal marijuana industry.

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    The Microsoft logo is seen in Issy-les-Moulineaux, outside Paris. The giant tech company is partnering with Kind Financial, a startup that makes software for the burgeouning legal cannabis industry.
    Michel Euler/AP
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Microsoft is making its first foray into the highly lucrative legal marijuana business.

The tech giant has struck a deal with Kind Financial, a Los Angeles-based firm, to market its software to local and state agencies that monitor growers and distributors to make sure they are complying with regulations for the sale and distribution of legal pot.

The partnership is one of the first major investments into the burgeoning legal marijuana industry by a Fortune 500 company. With potential revenues reaching into the billions and half of US states already permitting legal marijuana in some form, more big businesses are starting to take notice.

As Microsoft’s chief source of past revenue, personal computers, has dried up, the company has been ramping up its cloud computing business. Microsoft will allow Kind to run its software on its “Azure Government” cloud, which provides services to government agencies.

Twenty-five states plus Washington, D.C. currently allow some form of legalized marijuana use, mostly for medical purposes. Additionally, Alaska, Oregon, Washington State, and Colorado also allow adults to use it for recreational purposes. A handful of states including California and Massachusetts will vote on whether to do the same later this year.

The increased loosening of marijuana laws across America has been lauded as progressive by some, including big businesses and lobby groups who see it as a lucrative opportunity. Others have expressed concern that it could become akin to the big tobacco and big liquor industries, with the use of heavy-handed marketing and financial clout used to manipulate legislators and drive up demand for the drug among vulnerable groups including teens.

In Colorado alone, the sale of marijuana was worth $1 billion in 2015, one year after legalization.

Smaller brands have already started to carve out niches in the nascent industry.

The founders of Ben and Jerry’s ice cream flagged preliminary interest in the production of marijuana ice cream last year.

Bethenny Frankel, who became famous via the reality series “Real Housewives of New York City” and created the “Skinnygirl” line of alcoholic beverages, flagged plans early last year to launch her own brand of marijuana

“She read about how profitable the cannabis industry is and wants to get in on that,” a company insider told Us Weekly around the same time as Cohen’s comments.

Colorado, where recreational marijuana dispensaries opened for the first time in January 2014, saw creation of more than 3,500 jobs in the cannabis industry between the passing of the law legalizing marijuana and the first quarter of 2014. The state also has around 18,000 state-certified pot industry workers, eligible for a variety of jobs including cultivation, “edibles creators,” and retail "budtenders."

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