Bruce Kennedy ~ WeedWorthy ~
Investors both large and small are focusing intently on the cannabis industry
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As momentum grows towards the greater legalization of marijuana across the United States, a new wave of investors are closely watching the cannabis industry.
“There’s money out there that’s risk-seeking, not risk-adverse, that’s interested in this stuff,” says Seattle-based Bruce Barcott, author of Weed the People, The Future of Legal Marijuana in America, which is scheduled for publication by Time Books in April.
Barcott says there are plenty of people attempting to get into the industry at the lower level, seeking investments in places like Washington State, “where people are dying for investments, trying to get their pot shops open.”
And given the current residency requirements states like Colorado and Washington have for people directly involved in marijuana cultivation, he believes the ancillary companies – businesses like marijuana-related security and insurance firms – are getting close scrutiny from would-be investors.
At the other end of the investment spectrum are the groups like Privateer Holdings, which in January received a multi-million dollar investment from the Founders Fund venture capital firm.
“Founders Fund is known for making some of the most lucrative and radically transformational investments of the past decade,” Privateer Holdings CEO Brendan Kennedy said in a press statement. “With this investment they are signaling that they, like us, believe that the end of (marijuana) prohibition and the social harms it causes is inevitable.”
The entrance of venture capital is significant, says Troy Dayton, CEO and co-founder of The ArcView Group – which recently released the third edition of its State of the Legal Marijuana Markets report.
“It’s the next layer to a funding ecosystem, an….investing ecosystem,” he told WeedLife, “that will be complete when federal legalization occurs and you have IPOs, and you have companies on the Nasdaq – and you have big institutional financing coming into this.”
Dayton believes the entrance of the big players is “bringing some great teams to the table” while also inspiring more small, angel investors and entrepreneurs.
But there is a downside to the arrival of this next wave of investors, he adds, in that it can take away from some of the passion and idealism that gave birth to the cannabis culture and made it successful.
“All the best ideas of the last couple of decades have come from the hippies,” he notes wryly. “They were right about organic food, they were right about renewable energy, and they’re right again about cannabis. In each of those instances what you had was an idea, a belief about how the world should be.”
The challenge, according to Dayton, as more profit-oriented people enter the marijuana industry, is to “marry the best ideals of activism with the best ideals of business.”
“There’s some dilution of culture in that, yes,” he acknowledges, “but was the ultimate goal? The ultimate goal for organic foods was to get more ordinary people to consume more organic foods, not to preserve the organic food culture. The same thing needs to be true for cannabis. Our goal is to ensure that not a single adult is ever punished for this plant; not to preserve cannabis culture. Because the best way to preserve cannabis culture is to ensure that nobody’s punished for it.”
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