Dive Brief:

• Microsoft announced it will partner with Kind Financial, a maker of software that provides "seed to sale" services for cannabis growers, according to the New York Times.

• Kind’s software was designed to help states keep tabs on marijuana sales and commerce, allowing marijuana growers to track inventory, handle transactions and more.

• The partnership makes Microsoft the first major tech company to openly link itself to the legal marijuana industry.

Dive Insight:

Until now, most large tech companies have shied away from the pot industry, leaving it to tech start-ups. But Microsoft’s move may signal a change.

"I would like to think that this is the first of many dominoes to fall," said David Dinenberg, the founder and chief executive of Kind.

Microsoft said it will work with Kind’s government solutions division, offering the software to state and local governments that are building compliance systems. The company will house its service on its Azure government platform, remaining strictly involved with complaince. 

Twenty-five states have now legalized marijuana in some form or another, and it’s clear that regulating it will be an industry worth a lot of money. Matthew A. Karnes, the founder of Green Wave Advisors, which provides data and analysis of the marijuana business, said he estimates marijuana sales could climb to $25 billion by 2020.

This fall, voters in five states, including California, will decided whether or not to legalize marijuana for recreational use. If California voters approve the measure, big money will follow, and Microsoft will be ready.

"We do think there will be significant growth," said Kimberly Nelson, the executive director of state and local government solutions at Microsoft. "As the industry is regulated, there will be more transactions, and we believe there will be more sophisticated requirements and tools down the road."