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2020 was a defining year for cannabis: What comes next?

To say that COVID-19 has dominated the past year would be an understatement. We’ve seen the pandemic reorient how we interact with businesses, each other and the world around us. It’s accelerated many trends in business — from e-commerce to digital payments — by several years in a matter of months.

The cannabis industry is no exception. Cannabis was already the country’s fastest-growing industry, but 2020 has taken the space to another level. A record-high percentage of Americans now support cannabis legalization.

By all accounts, cannabis was one of the biggest winners on Election Day, with legalization passing in Arizona, Montana, Missouri, New Jersey and South Dakota. More than one-third of the country — over 111 million people — now live in a state with legal recreational cannabis. By 2021, the legal industry is expected to be worth $24.5 billion.

A record-high percentage of Americans now support cannabis legalization.

Never has it been more clear that cannabis is now a staple in mainstream America. As we look toward 2021, this upward trajectory not only opens new doors for the industry, but the economy as a whole, with greater innovation, investment and employment opportunities flowing into the space.

A green economy

More than 57 million Americans have filed for unemployment since March. While the financial and employment opportunities around cannabis are not a silver bullet, they’re certainly not something we should ignore.

Legal cannabis sales reached nearly $20 billion this past year and are expected to top $40 billion annually within the next four years. As the industry continues to grow, companies are hiring to keep pace. The legal cannabis market supports 243,700 full-time-equivalent American jobs, which are set to multiply by 250% between 2018 and 2028. This makes the cannabis industry America’s largest source for new jobs.

Cannabis can also strengthen state economies and generate opportunities for increased tax revenue, particularly as state and local budgets dwindle. For example, with its new legalization measure, Arizona will issue a 16% tax on cannabis sales that will go toward community colleges, police, fire departments and public health programs.

Accelerating cannabis e-commerce

If there’s one point that’s been reinforced this year, it’s that cannabis is a highly demanded and indispensable consumer good.

At the height of widespread shelter-in-place orders this spring, dispensaries were classified as “essential” in many states alongside grocery stores, gas stations and pharmacies. While people couldn’t shop at department stores or go to the movies, they could still purchase from their local dispensary. This government recognition was a major signal to the market that the space has been elevated to the mainstream.

A resounding response from consumers followed with record cannabis sales. Unprecedented demand forced cannabis retailers to revolutionize the ways they do business and how customers purchase products. To minimize direct person-to-person contact that can potentially spread the virus, dispensaries turned quickly to e-commerce and digital payment solutions to keep employees and consumers safe while modernizing their business.

As a result of these changes across industries, online sales will reach $794.5 billion by the end of the year, far surpassing original estimates. Experts estimate that the pandemic accelerated the shift to e-commerce by five years. At Dutchie, we’ve seen this firsthand. Since March, we’ve experienced a 700% surge in online orders and a 32% increase in average order size.

Looking ahead to 2021

These political and business transformations were milestones that we’ve fast-forwarded to at breakneck speed. So, what comes next?

I see technological innovation at the forefront of the legal industry moving forward. Technology will enable dispensaries to streamline operations in a highly regulated space where compliance is essential. In turn, data will increasingly become more important as retailers will need to better understand their data to make more proactive, informed decisions. This will be a focus for dispensaries of all sizes, but in particular larger businesses that are looking for an increasingly high level of sophistication for their online experiences.

To meet this need, we’re finally seeing new enterprise-level solutions on the market that empower dispensaries to fully leverage their data to design their unique online identity so they can remain competitive as more players join the space.

As legalization continues to spread, wider adoption will further legitimize the industry and de-stigmatize cannabis sales and use. We will likely see cannabis companies attracting more top talent from some of the most notable companies across mainstream industries, and more software platforms, businesses and investors that were formerly hesitant to enter the space begin to work with and invest in cannabis-related businesses. Federal legalization of cannabis also has the potential to enhance liquidity and open the floodgates to more investment deals.

Additionally, as we’ve already begun to see, there will be an increasing trend toward consolidation across the space as retailers continue to make big acquisitions and mergers. More multistate operators will consume smaller players and smaller players will combine forces, creating a space that is more cohesive and less fragmented.

The future of cannabis

The cannabis industry is still in its infancy, but its potential is crystal clear.

As more states legalize and the industry grows and matures, we will see the needle move even closer to where we want to be: Where legal cannabis is afforded the same technological and financial resources as other mainstream industries; innovators can more freely come together to develop modern technology solutions to push the space forward; and where consumers and patients can get what they want more conveniently.

Free societies face emerging, existential threats from technology

Silicon Valley is currently, and correctly, under fire for the failure of leading platforms such as Facebook, Google and Twitter to protect against the spread of disinformation, hate speech and efforts to disrupt our elections. I don’t know why these companies behaved as they did.

But whatever the reason – naiveté, excessive focus on near-term profits, or simply a lack of proper attention on mind-numbingly complex problems – it’s clear they have to do a better job of making sure technology makes our world safer, freer and more stable rather than the opposite.

But it’s not just these big companies that need to up their game. As venture capitalists, we need to do more to find, fund and help a new generation of technology companies that build the infrastructure and applications to deal with technology-based threats to stability and security. Yes, Facebook and Twitter must deal with unintended consequences of their massive platforms. But if history is any guide, it will be new companies that come up with the bold new visions and business models to address fundamental, once-in-a-generation challenges.

I don’t use the word fundamental lightly. Just think about all security failures you now take for granted, that once would have been unthinkable. Our PCs and other devices are patched every few hours or days, rather than every few months. We are routinely warned by merchants—sometimes even credit agencies!—to change our passwords because they’ve been hacked. We are relieved, rather than annoyed, when the credit card company calls to verify our recent purchases.

We feel abused when we read how our online identity has been monetized without our knowledge or used to micro-target us with ads by groups seeking to polarize our politics. And there are deeper-seated concerns, like the nagging fear of a terror attack or a lone-wolf gunman when we enter an airport or let our teenage kid go to a concert. Our physical and cyber selves feel threatened on a regular basis. Like it or not, we are too often under attack, as individuals, consumers and as citizens. But like the proverbial frog in a pot, we don’t seem to notice the rising water temperature.

If we stick with the status quo, that water is only going to get hotter. We already know the Russians (and the Iranians, and the North Koreans) are again targeting U.S. voting systems in advance of the midterm elections, and the Russians also have the ability to shut down large parts of our electric grid. It hasn’t happened yet, but will Americans start worrying about congregating in public spaces, whether it is to protest, attend large rallies, or go to concerts? I grew up in Pakistan, where horrific gun and bomb attacks on civilians are more common. I can’t help fear the same scourge will come to our shores.

If this sounds like scare-mongering, so be it. There is no getting around the fact that more people have more ways to do large-scale damage than ever before. Thankfully there are technologists and entrepreneurs working diligently to find ways to defend us from such harm.

Our portfolio company Evolv Technology, for example, is using advanced sensors and AI in weapons detection systems that can screen hundreds of people per hour  without making them slow down or empty their pockets and purses. Companies like ShieldAI, Convexxum, Echodyne and others are using machine vision and advanced radars/lidar technologies to prevent people from being put in harm’s way by drone-type attacks.

A drone flying and filming over Dubai

Funding such companies can be different than the deals Silicon Valley VCs are used to.  In most cases, these firms must collaborate with trusted government actors, intelligence agencies and enforcement organizations–not to mention comply with their regulations. To be successful, they need to share information with other companies, including competitors.

But I’m betting the trouble will be well worth it. History tells us that companies that overcome big obstacles to create new markets often enjoy years of rapid growth, and few competitors.

Most of all, I believe a nervous world is ready to reward companies that make it feel safer. Just as Uber and Airbnb caught the front edge of the sharing economy boom, companies whose mission is aligned with a change in the societal zeitgeist can create huge value.

Investors are already doing their part. DCVC recently invested in Fortem Technologies, and Shasta Ventures in AirSpace, which make Star Wars-ish systems of AI-based drones whose only role is to automatically detect, identify, and slam into drones that wander into unauthorized airspace — say, over a private estate, or a factory.

General Catalyst invested in Mark43, which makes a cloud platform to help police departments and their detectives investigate crimes more quickly and effectively.

While these mission-oriented companies may not provide the fastest or steepest ramp to riches, the best of these mission-oriented companies will create technology that affects each of us every day, and businesses that will be resilient to economic cycles, fads and fashion. For investors, it’s a twofer of enlightened self-interest — both as investors, and as citizens. To paraphrase JFK, we should invest in such companies “not because it is easy, but because it is hard.”

Trolls thought I was a man. That saved me.

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This post is part of Me, online, Mashable’s ongoing series digging into online identities.

I was locked in my friends’ bathroom on the phone with my thesis adviser and staring at Reddit. It was snowing pretty hard and though there was a window with some theoretical light streaming in, I felt like I was under a blanket, the flashlight of my attention pointed at a screen that I refreshed and refreshed and refreshed. I was discussing the critical thesis component required for my graduate degree, an MFA in creative writing. It was titled Masculinity and the Making of the Modern Nerd. It was a mess. Read more…

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