MassRoots (OTC.BB:MSRT) has been called the Facebook for pot smokers, but this online social website for the cannabis community is fighting cannabias. The Denver-based mobile network was launched in July of 2013, went public in 2015 and now has over 325,000 registered users, yet it fights to be recognized as a legitimate business.
Cannabias is a term coined for cannabis businesses that are treated as inferior due to the nature of their industry. Last year the Apple App Store removed MassRoots and created a rule that all social cannabis applications were prohibited. For a mobile company like MassRoots, this was devastating news and highly ironic since it was widely known that Apple’s founder Steve Jobs smoked pot and used LSD at one time.
MassRoots went on a fierce campaign to get their position in the app store restored and Apple capitulated in mid-February. The loss of the Apple access cost MassRoots some time for adding users, but they now hope to reach their goal of 500,000 registered users during the third quarter of this year. They also hope to cross the million user mark by the first quarter of 2016.
“We’re held to a much higher standard because we’re cannabis related,” said CEO Issac Dietrich. “It presents additional challenges and that’s just the nature of doing something unique and doing something disruptive.” The company struggled to persuade Silicon Valley investors that typically throw money at just about any business idea due to its association with cannabis. “We were looking at what was happening in the public market. You have all these companies with no real business whatsoever trading at $100 million market caps, money pouring in left and right and the only money we could raise was on the condition of us going public.” said Dietrich.
Then the first day the company starting trading its stock, MassRoot’s bank account was shut down. The company doesn’t grow or sell marijuana. It’s strictly an ancillary, mobile application. However, some deem the company as aiding and abetting drug use. To combat that, MassRoots employs a full-time content specialist who makes sure users aren’t trying to use the site to make deals.
MassRoot’s next public dissing came from none other than the technology conference sponsored by the publication TechCrunch called Disrupt. MassRoots says it won the popular vote for companies in the StartupAlley and should have moved on to the Startup Battlefeld, where new companies compete with their business pitches for a prize of $50,000. Instead, MassRoots said TechCrunch disenfranchised 50% of the vote and chose a company with less than 1,000 votes. MassRoots went on a social media campaign asking TechCrunch to #ReleaseTheVote. TechCrunch never publicly addressed the complaint and didn’t respond to a request for a comment.
Like Facebook, MassRoots generates most of its money from advertising and its secondary source of income is merchandise sales, which is mostly used to offset marketing costs. The company has raised $2.2 million, but at this growth stage it is still losing money. It lost half a million dollars in the first quarter of this year and only had $54,000 in cash at the end of the quarter. Its revenues for the first quarter were only $941 and its gross profit for the same period was $241.
MassRoots is only available to registered users in the 23 states where marijuana has been made legal and this limitation is capping its growth. On a positive note, Dietrich has captured a younger demographic in the cannabis market with an average age of 18-25 for its registered users, not the typical 45-60 age group that is common with cannabis companies. However, the company will have to hold on long enough in order to generate the advertising it needs to become profitable. “Our goal is to become the dominant consumer marijuana site,” said Dietrich. “I would love to see the day that Domino’s puts an ad on our network. Got the munchies? Order a pizza.”