Looking for money to get your cannabis idea off the ground or take your MMJ company to the next level?
Dust off your suit jacket, refine your business plan and polish your pitch, because a growing number of investors are looking for opportunities to get involved in the marijuana industry.
The latest evidence of the improving funding climate came last week, when Privateer Holdings – the first private equity firm in the industry – announced it raised $7 million to invest in cannabis-related companies. Over a dozen investors contributed in amounts ranging from $50,000 to in excess of $1 million, with interest increasing noticeably during the past few months of fundraising, Privateer’s CEO told MMJ Business Daily. What’s more, the firm will launch a second round of fundraising soon and will aim for at least $25 million.
The announcement comes on the heels of several other positive developments in the funding arena over the past few months:
- The Securities and Exchange Commission voted to lift a ban that prevented entrepreneurs from pitching investors via advertisements and talking about their funding needs to the media. The result: Cannabis startups will have an easier time getting their name out in front of potential investors, easing one of the biggest challenges to raising money in the industry right now.
- A California firm co-founded by the CEO of WeedMaps announced it is starting to raise money for a new venture capital fund. The founders hope to net anywhere from $10 million to $25 million for investments in ancillary marijuana companies. Whether or not they’ll reach that goal remains to be seen, but it’s yet another example of increased funding efforts in the marijuana space.
- In April, a Delaware financial firm reportedly launched a $250 million fund that offers marijuana businesses cash advances and lines of credit. The amount of available money is particularly notable, as is the fact that the funds are earmarked for dispensaries and other businesses that actually handle marijuana.
- The ArcView Group, an angel investment network, recently helped a handful of cannabis startups land more than $1 million in investments combined. The companies offer everything from security services for dispensaries and grows to extraction systems.
- One of the companies that received money from ArcView investors – a crowdfunding site called WeCanna – is set to launch soon, providing average consumers and small investors with the chance to pump money into cannabis-related companies, political campaigns, projects and other efforts.
All in all, a lot of activity in a short period of time. If these efforts prove successful and cannabis companies that receive money start providing solid returns, investors could start flocking to the industry.
Also last week, the Colorado Department of Revenue named the members of its five working groups set up to help hammer out the nitty gritty details of regulations on the adult-use marijuana industry. Aside from lawmakers and law enforcement representatives, more than a dozen cannabis business leaders were named to the working groups, including Meg Collins of the Cannabis Business Alliance, Genifer Murray of CannLabs, Mike Elliot of the Medical Marijuana Industry Group, dispensary owners Cheri Hacket and Matt Huron, and MMJ attorney Christian Sederberg, among others.
It’s encouraging to see so many MMJ business professionals (as opposed to just lawmakers, law enforcement personnel and academics) in the working groups, as they will help shape the permanent rules on everything from packaging and labeling to inventory tracking.