Exclusive Interview with MJ Freeway Co-Founder and CEO Jessica Billingsley
Almost 10 years ago, cannabis compliance technology company MJ Freeway started as a seed-to-sale tracking company in the cannabis space. Today, the company is publicly traded and operating in the United States and 13 other countries. Co-Founder and CEO Jessica Billingsley, now CEO of Akerna (NASDAQ: KERN), spoke with New Cannabis Ventures about the MTech Acquisition transaction that took the company public and the company’s growth strategy.
Billingsley, an early investor in the Colorado cannabis space, was charged with finding a software solution for one of the first licensed operators in the state’s medical program. She couldn’t find anything that would work, so she and her co-founder set out to build a solution specific to the cannabis space: MJ Freeway.
Two years ago, a malicious attack involving a now-retired product took the company offline. One hundred percent of the company’s data was encrypted, and 90 percent of it was recovered. Today, the company spends a significant amount on cybersecurity (Billingsley estimates the number is more than most competitors make in revenue) to protect its current product. Though an attack like that could have been crippling, Billingsley sees it as a springboard for growth, as since then the company has experienced double-digit growth.
The MTech Transaction and Acquisition Strategy
MTech Acquisition and MJ Freeway have merged to form Akerna, now trading on the NASDAQ exchange under the symbol “KERN.” As the parent company, Akerna will pursue consolidation to connect more data points in the global cannabis supply chain, according to Billingsley.
The company is interested in both domestic and global emerging markets, while still serving mature markets. There are opportunities for acquisitions within the seed-to-sale space and opportunities for acquisitions that would add different functionalities to MJ Platform, the company’s B2B platform.
Market Share and Leveraging Data
MJ Freeway operates on a global scale with approximately 100 employees. In addition to its B2B platform, the company also has a B2G business segment: Leaf Data Systems. The company has state contracts with Washington and Pennsylvania, and it was recently announced as the contract winner for Utah.
Since inception, MJ Freeway has been cloud-based and had the rights to aggregate and monetize data. The company is looking to leverage that data to help its existing clients, grow its market share, and advance the industry as a whole.
MJ Freeway provides value to its clients not only through compliance support but also by using data to answer specific questions. For example, a cultivator in Oregon discovered that a strain being sold for 10 percent more than another was actually costing 50 percent more to produce. Likewise, the company can give regulators insight with nuanced data – Billingsley offers the example of how much moisture loss is acceptable in a particular strain. These types of data insights help cannabis companies and regulators understand compliance, their markets, and how best to proceed.
MJ Freeway has gone through a number of capital raises. Tao Capital was involved in the company’s Series A, while Roger McNamee led the Series B round. Batu Capital is the company’s Series C seed investor. Managing Director Emery Huang serves on the MJ Freeway board. This investment office has strategic connections to Asia, which the company is looking to as an emerging market, according to Billingsley.
MJ Freeway did $10.5 million in sales in fiscal 2018, and the company is on track to meet its projections of a little more than $11 million for the fiscal year end on June 30. Going forward, the company is focused on linking cannabis technology companies and unifying data points to help drive compliance in the industry, according to Billingsley.