Perusing a smoke shop in a non-legalized state will lead to some funny conversation. No matter the vibe—whether it be professional or an aesthetic that hasn’t changed from the ’70s—shop managers will show off glassware and vaporizers repeating one phrase. “This is for tobacco use only.” But the truth is that tech companies are embracing marijuana over tobacco.
It’s a wind-and-nod routine of sorts, but according to a recent TechCrunch report, that trend could soon be changing. The article focuses on how funding for cannabis startups have been on the rise in the past year, while e-cigarette startups are fledgling.
Not a single company that mentioned tobacco, cigarettes or e-cigarettes in its Crunchbase profile raised a disclosed funding round in the past year. By contrast, at least 45 self-described marijuana and cannabis companies did.
The story also goes on to detail that funding and money hasn’t exactly been bursting in the e-cigarette sector, but that there’s still been substantial funding and exits over the years. That’s now changing, partly due to the FDA finalizing tighter regulations on e-cigarettes. Previously that market hoped for lighter rules, as e-cigarettes were pitched as an alternative to smoking.
But cannabis has also played a factor in the downward trend of e-cigarette funding.
Part of the funding dearth may be due to lack of VC interest. It’s hard to find a cigarette smoker in Silicon Valley, where caffeine and alcohol are the preferred indulgences and addictions (with cannabis not far behind). Thus, it’s not entirely surprising that the venture industry hasn’t been a big backer of e-cigarettes.
To learn more about cannabis investing, check our handy guide here.