Legal marijuana needs big data to grow

When it comes to growing a plant-based industry, big data and technology may be more valuable than fertilizer.

As the legal marijuana industry continues to expand, so has the need for data services to increase efficiency and consumer education. But companies like SAP SAPGF, -3.86% and NetSuite N, -0.80% that typically provide data collection and organization to more traditional industries aren’t extending their business to the legal cannabis industry, creating an opening for new companies catering just to the marijuana market to fill the space.

“They’re bringing normal business processes into the cannabis industry,” says Alan Brochstein, founder of 420 Investor, an investor community for publicly traded cannabis companies. “It’s about time.” SAP and NetSuite didn't respond to requests for comment.

With the legal cannabis market expected to reach $6.7 billion in medical and recreational sales in 2016, industry experts expect data to play a primary role in accelerating this growth. These data services track everything from plant cultivation to consumer purchasing trends, helping marijuana retailers comply with state regulations and optimize their inventory to meet demand.

One of those services, Flowhub, was founded in late 2014 as a cannabis-tracking software to help marijuana growers operate in compliance with state regulations. Before that, many manufacturers had a blind spot when it came to supply chain management, opening them up to potential missteps like missing plants or pesticide use, says Kyle Sherman, the company’s chief executive. “We wanted to provide tools to help people so we can legalize [cannabis] responsibly,” Sherman says.

Read more: The marijuana business might have a high-stakes pest problem

About 100 companies in Colorado and Oregon are signing onto the Flowhub system, according to Sherman. The software system also allows for other data applications to be incorporated with it, similar to how mobile apps work within smartphones.

One of these data applications is Headset, which launched nearly two months ago but is already tracking $65 million worth of cannabis transaction information, according to Cy Scott, the company’s chief executive.;