Canna Security looks to grow with $1m investment

DENVER—ArcView Investments, a group of high-worth angel investors, on May 3 announced that "five companies received at least $1 million in commitments." Among those five companies is Canna Security, a company dedicated to protecting legal marijuana facilities.

“We opened Canna Security in 2009 and business has taken off. We just expanded to Washington state,” Daniel Williams, president of Canna Security, told Security Systems News.

Funds will be used for bringing on full-time technicians, expanding the support staff and expanding the number of offices.

Williams, who previously worked forEnvysion, a managed video as a service provider, runs the company with two partners. Chris Jenson, who was formerly with Envysion, serves as director of sales. David Rutlen, former owner of Global Security Pros, is director of operations.

So far, 19 states and Washington, D.C., have legalized marijuana for medical use. Three states have legalized pot for recreational use.

While other security companies such as ADT have said they will not secure marijuana facilities because the crop is still illegal at the federal level, Canna is looking forward to building a robust business around legalized marijuana.

“We installed [security systems] in over 250 growth facilities and dispensaries in Colorado since 2009,” Williams said. Williams estimates that Washington state, which recently legalized marijuana for adult recreational use, has “500 locations … many are large locations, some with tens of thousands of square feet.”

Canna has particularly good insight into the requirement for security system installation in Colorado because Williams helped state officials write the regulations. He's also assisting Washington state officials as they work to adopt Colorado's regulations.

The laws specify two mandated systems: monitored alarm and video surveillance. “It's 10 to 12 pages long, and very specific,” Williams said.

The laws define specific manufacturers and where those products should be installed. Cameras must be placed at certain distances from the ingress and egress of the buildings, near the scales and where transactions occur.

In growth facilities, cameras track the movement of the crop from the ground to scales to ensure that no shrinkage occurs along the way, Williams explained.

While Williams does not believe in over-regulation, he believes that “these regulations endorse legalization.”

Because legalized marijuana is relatively new in the United States, many states are still in the process of regulation. Colorado has led the way with regulations that include security systems. Williams believes that regulations in Colorado and Washington will be used as a model for other states. That will also help Canna's business grow, he predicts.

“Phase one is expansion in Colorado and Washington. Phase two is Rhode Island, Massachusetts, New Jersey, Arizona and California,” he said.

Canna will have employees in Washington in the near future and will likely eventually have offices in California and Arizona.

“California is one of the biggest [markets], but we don't have a clear time line of when they'll release their regulations. That's how we frame our expansion [expanding once the state has adopted regulations],” Williams explained.

Neither Canna nor facility managers want to put in systems that don't meet code.

Canna does not have the exact amount of the investment yet. Williams said Canna is still "currently in investor discussions/negotiations."

ArcView Investments is focused on investing in ancillary businesses associated with legalized marijuana.

“Angel investors have always led the way for the investment community. It was angel investors who brought us everything from automobiles and airplanes to personal computers,” said Steve DeAngelo, ArcView co-founder and investor, in a prepared statement. “Today a new generation of angels—cannabis angels—stood up to make their own contributions to improving modern American life.”

Update: May 9, 2013: The original version of this story reported that Canna Security had received $1 million investment from ArcView Investments. Canna Security has not directly received $1 million in funding, but this number was released as a “total estimated investment amount by ArcView to five start-up companies in the industry.” Canna is currently in investor discussions/negotiations.