The Columbian / Associated Press

Microsoft gets into marijuana biz by hosting pot tracking software

David Dinenberg is CEO of Kind Financial, which makes compliance and production-tracking software for the marijuana business. (Genaro Molina/Los Angeles Times)

LOS ANGELES — When David Dinenberg decided to get into the marijuana industry, his business plan was based on fear.

In 2014, he founded Kind Financial with the aim of making loans and providing other services to marijuana growers and sellers — customers banks were scared to work with.

Just two years later, though, the company’s main business is about helping navigate bureaucracy, specifically the red tape that comes with legalization. Its marquee product is software that helps government agencies track pot production and sales.

The startup drew headlines earlier this month after Microsoft Corp. announced it would make Kind’s Agrisoft Seed to Sale software available for sale on its cloud computing platform that services government clients — a move that marks Microsoft’s foray into the marijuana business.

Dinenberg, a 44-year-old Philadelphia native, is an unlikely software entrepreneur. He has no tech background and was formerly chief operating officer of Philadelphia developer Grasso Holdings.

But after taking huge real estate losses in the recession, he decided to try something new. With the help of venture capitalist and friend Wayne Kimmel, he started Kind in 2014 and persuaded other angel investors — including Lindy Snider, daughter of late Philadelphia Flyers owner Ed Snider — to back the company.

He spoke with the Los Angeles Times about his company’s evolution and its deal with Microsoft.

Tell me about Agrisoft. What does it do?

It’s software that enables regulators, in real time, to know where and how much marijuana is being grown, sold or produced. We’re providing real-time inventory all over their state and information on how much sales tax or other tax they should be collecting. Police or a regulatory agency can look and see that company XYZ says they have 1,000 plants, and then an inspector can go walk into that business and validate that.

How big a business is compliance software for the marijuana industry?

As the industry grows and matures, it’s going to become more compliant and more regulated. It is going to happen. We should embrace that happening. It makes the industry stronger and larger for everyone in it. The backbone of that is the track-and-trace software at the state level and, eventually, the federal level.

How did you connect with Microsoft?

I was introduced by one of my board members, Wayne Kimmel, to a relationship he had inside of Microsoft. We spent several months discussing the idea with Microsoft, and they were very warm to the idea.

What does having Agrisoft available on Azure Government, Microsoft’s cloud-computing platform for government clients, mean for you?

It puts our company in pole position to garner government contracts. Microsoft has relationships with states. We get the ability for Microsoft to support us with their sales staff. We get to use their lobbyists in those states.

Any takers so far?

We’ve already received phone calls from five states. Word is already getting out.

Do you see governments, rather than marijuana businesses, becoming your biggest clients?

Government contracts are usually multiple years in length. That brings a layer of stability to the company. But I’ve learned that the companies that win these government contracts end up capturing no less than 60 percent of the market.