Simplifya, a Denver-based software developer, is one of those “RegTech” players that help pot pros navigate the market. That’s especially the case now given the mounting devastation caused by the coronavirus outbreak, which has forced several companies in the space to furlough employees and close facilities.
Under the helm of CEO Marion Mariathasan, Simplifya has been improving its tech and even deepening its bench with engineering talent while so many other industries are cutting staff.
“We set out to do something that really had no prior playbook from a technology and content perspective,” Mariathasan said. “In order to provide a value-add product to operators, we had to first understand the pain points they faced.”
Mariathasan spoke with Benzinga about the various challenges he and others face during the COVID-19 pandemic — and how the cannabis space at large can pull through.
Companies are struggling despite consumers stockpiling cannabis. What are your thoughts?
MM: While I think COVID-19 certainly is one of the biggest driving forces behind the uncertainties we see today with the market, economy and society in general, I think layoffs are a part of a bigger problem that has been brewing since probably mid-2019.
Many investors were shying away from making new investments as there were fears that we were due for a recession. The general consensus was that one was around the corner. As an angel investor, I think I only made three investments last year, and that was during the earlier part of the year.
When the pandemic panic set in, most companies had realized that raising money was getting tougher, and the valuations that many cannabis companies were enjoying in prior years were gone.
Many executives started thinking about how to best create the longest runway possible for their companies if the markets continue to collapse. COVID-19 just panicked cannabis executives so bad that many companies that were planning to raise money now had to go into survival mode. They had to buy time to come out the other end of this crisis — not knowing how long it was going to take.
We now know that many states have deemed cannabis as an essential, but a few weeks ago nobody really knew for sure how cannabis was going to be treated and whether governments would view cannabis as a necessity. Companies rushed to cut their burn, and that’s why I think many started to lay people off.
Will sales continue to go up?
I do think sales will continue to go up. Cannabis is showing to the world that it may be recession-proof — similar to alcohol. I think people are anxious, nervous and panicked about an uncertain future we all face and so cannabis becomes a necessity to calm nerves whether from a recreational or medical perspective.
As for production, it remains to be seen. It all depends on how many people in the supply chain become infected with COVID-19 and therefore cannot produce for the industry.