Silicon Valley venture firms like the heralded Benchmark Capital, which brought us such internet/app gems as Twitter, Instagram, Snapchat and more, are always looking for the latest, hottest trends. Which, naturally, led them to cannabis. California’s legalization laws go into effect on January 1st, and the money is already rolling in.
Benchmark dropped a cool $8 million into Hound Labs, an Oakland startup that’s developing a real time cannabis intoxication test so that drivers and the police that pull them over have a way to prevent buzzed driving.
They are merely a drop in the bucket, however. California’s pot profits are expected to reach six and a half billion dollars by 2020 and it is truly the era of the green rush. Experts say that other legal states, like Colorado and Washington, were practically testing grounds for California, the world’s sixth largest economy.
Eager backers are investing tens of millions into new-fangled medicinal products, like new vaping methods, new transdermal patches and of course apps.
Cofounder of PayPal Peter Thiel put $300,000 into the California ballot that did pass and is now bringing recreational cannabis to the Golden State. Now Thiel has given over millions to Privateer Holdings, a Seattle based private equity firm that researches medical weed products and to a slew of other cannabis related ventures.
California going legal is predicted to inspire more states to go the green route as well. Let’s be honest, the initial pot legalization proving grounds have already shown bolstered economies and no rises in youth use of the herb. They’re raking in tax revenues for schools, roads, law enforcement, drug abuse treatment and other social and infrastructural enterprises.
The snag? The federal government still classifies marijuana as a Schedule I drug – one with a high potential for abuse and with no recognized medical value. Yet, most of the United States have already legalized various forms of medical uses and seven states plus Washington D.C. have legalized it.
Most major biotech companies have shied away from cannabis, partially because its Schedule I status means difficult to no access to banking. Plus, most large venture firms get moneys from pension funds and public companies, so risk and morality clauses factor in.
The profits are there to be made, though, and many individual investors are jumping right in. L.A. based private equity firm MedMen has conjured up around $80 million for marijuana ventures and recently held their first investor’s conference in San Jose.
As the questionably legal landscape opens, it’s ironic and sad that some are pulling out their millions while others sit in jails and prisons for the same idea, but we can only hope that these venture companies continue to lend credibility to the growing green industry and that common sense from both our government and our people will allow the green rush to flow on and its prisoners to be set free.