Driven by a surge in cannabis use during the COVID-19 pandemic, industry entrepreneurs and investors are gearing up for even greater growth in the sector as the legalization of cannabis spreads and the U.S. economy reopens.
Highly investable
A surge in cannabis sales during the coronavirus pandemic, and the spreading legalization of cannabis, are driving fresh interest in cannabis-related startups.
Cannabis technology startups, including those enabling home delivery of pot, got a big boost during the pandemic as more Americans partook, igniting investor interest in companies that provide everything from cultivation management tools to compliance and e-commerce software for an industry that still operates in a legal gray zone at the federal level.
As more states fully legalize cannabis...
’20
15 states
and D.C.
Ariz.
Mont.
N.J.
S.D.
’19
Approved in 8
states and D.C.
by 2016
Ill.
Mich.
’18
’16
Vt.
Calif.
Maine
Mass.
Nev.
’14
Alaska
Ore.
D.C.
2012
Colo.
Wash.
2012
’14
’16
’18
’20
… legal sales of cannabis are forecast to grow...
Global
$56 bln
$50 bln
legal sales
$25
0
2020
’21
’22
’23
’24
’25
’26
… and U.S. venture capital is pouring in.
Entire cannabis sector
Cannabis tech
Incomplete quarter
Investment surged in
late 2018 and early 2019...
$1 bln
deal value
... and tailed off
after the initial boom...
... and is rising
once again.
$500 mln
0
Q1
2018
Q1
2019
Q1
2020
Q1
2021
Entire cannabis sector
Cannabis tech
Incomplete quarter
Investment surged in
late 2018 and early 2019...
$1 bln
deal value
... and tailed off
after the initial boom...
... and is rising
once again.
$500 mln
0
Q1
2018
Q1
2019
Q1
2020
Q1
2021
Cannabis entrepreneurs say they have to move quickly and build their brands before full U.S. legalization levels the playing field – a process that many expect to gather steam this year.
“Why are you going to Weedmaps (for listings of cannabis retailers) if you can go to Yelp? Why do you order through this or that system if you can order through DoorDash or Uber Eats?” asks Steve Allan, chief executive of The Parent Company, which has Jay-Z as chief visionary officer and is looking to consolidate smaller players following its January listing through a special purpose acquisition company.
Cannabis stock prices
After a brutal sell-off in 2019, cannabis stock prices have begun to rebound.
All told, investors have poured more than $2.5 billion into cannabis tech startups in North America since 2018.
That interest comes as shares of publicly traded cannabis companies – many of which are listed in Canada because they are barred from U.S. exchanges – have begun to rebound after a brutal sell-off in 2019.
“We don’t necessarily want things to go (fully) legal today because there’s a lot of value in our companies, and we want more time to build,” said Lenore Kopko, managing partner at Gotham Green.
Edited by
Jon McClure and Jonathan Weber