The top 12 venture-capital firms making deals in the booming cannabis industry that’s set to skyrocket to $75 billion

Cannabis VCs

Ever since Colorado legalized cannabis for all adults in 2014, the cannabis industry has blossomed, with a multitude of companies competing to scale up as more states legalize the drug.

With so few institutional investors ready to write checks to cannabis companies — marijuana is still considered a Schedule I drug by the US federal government — the industry has given rise to a number of sector-specific firms that deeply understand the nuances of investing in such a highly regulated and fragmented market.

Besides Lerer Hippeau and Slow Ventures, these cannabis-specific funds mostly raise money from private investors or family offices that may have a higher risk appetite than the average pension fund. They get into top startups before the bigger players begin throwing their weight around, and can quickly adapt to shifting regulations and consumer sentiment.

In the US, most funds focus on ancillary companies, startups that provide software and services to the cannabis industry, or biotech firms focused on the agricultural or pharmaceutical side of the industry, rather than investing directly in companies that touch the plant itself. It’s a method for skirting federal marijuana regulations.

But now that Canada’s set to legalize marijuana this month, more capital is rushing into the market than ever before. Because the country has federally coherent regulations, some of Canada’s biggest banks have pushed into space, either underwriting deals or helping cannabis startups go public.

Last year the total value of all venture deals in the cannabis space across the globe was just under $378 million, according to analytics firm PitchBook. By the beginning of October, that number nearly doubled, to $643 million. To put that growth in perspective, in 2012, the first year PitchBook had data available, there were only two deals in the cannabis sector — worth just $300,000.

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Source:: Business Insider


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