Analysts recently identified cannabis as the fastest growing industry in the U.S. As stated in an article published by TheStreet.com, “Pot is quickly evolving from an illicit, counter-cultural activity into mainstream capitalism. The long-sought normalization of marijuana laws is becoming a reality among an increasing number of states, spawning a huge multi-billion-dollar industry that's attracting a "green rush" of entrepreneurs, venture capitalists and individual investors.”
With the launch of its first cannabis-centered venture capital fund, First Capital Ventures has an insider’s look at the state of the industry and what’s in store for the future.
The State of Cannabis Investing
“For any industry to thrive it must be built upon three key pillars: 1) The participation (and lobbying power) of big business trailblazers, 2) The support of the financial sector and 3) The acceptance of the masses,” says Chris Franz, Managing Director of Viridis Fund I at First Capital Ventures.
Breaking the Corporate Taboo
In June, The New York Times reported that Microsoft was “breaking the corporate taboo on cannabis” by announcing a partnership with California startup KIND Financial to offer software to state agencies that allows them to monitor the entire life cycle of cannabis production and sale.
The Times continued, “The company’s entry into the government compliance side of the business suggests the beginning of a legitimate infrastructure for an industry that has been growing fast and attracting lots of attention” Since this announcement both Arrow Electronics and Scotts Miracle-Gro have signaled their own commitments to cannabis, and Google has opened the conversation.
“This was the first official industry assessment by a major financial institution, and a key milestone in mainstreaming marijuana—it means the big banks are preparing to capitalize on cannabis once it becomes federally legal,” says Franz.
Why Now is the Time to Invest in Cannabis
“The third pillar is expected be cemented in November with multiple states on the ballot to legalize,” says Erin Turoff, COO and Managing Partner at First Capital Ventures. “California, Nevada, Arizona, Massachusetts and Maine are lined up to vote for legalized recreational use, while Florida, Missouri and Arkansas will vote for legalized medicinal use. For investors, this is a classic case of the early bird catches the worm.”
“Before, not after, this tipping point is the time to invest,” agrees Franz. “The greatest potential returns will go to those who enter ahead of the curve. In 20 years we believe investors will look back and think how incredible it was to get in on the ground floor.”
A Rare Window of Opportunity
Franz continues, “Once California—the world’s 6th largest economy—is leading the charge, the industry will have likely gained unstoppable momentum, and the big banks and big business will make their play - dispelling any question of ‘legitimacy’. But with legitimacy comes access to traditional sources of capital, closing this extremely rare window of opportunity investors now enjoy.”
Are you an accredited investor and want to explore the benefits of professional cannabis investing through First Capital? Contact us to start the conversation.
 New York Times, June 2016, “The First Big Company to Say It’s Serving the Legal Marijuana Trade? Microsoft”