It was just a few months ago that our collective jaws were dropping at the boatload of marijuana investment dollars that were pouring into the industry. In 2014, 59 cannabis companies raised raised a total of $104.5 million. In May of this year, $200 million was pledged in a single day by two different investors. Less than six months later, the flood of funds shows no signs of stopping, as a staggering $1.8 billion has been raised in the first three quarters of 2017, significantly up from the $720 million that was raised during the same time period last year.
While Attorney General Jeff Sessions’ prohibitionist mindset and marijuana’s illegality at the federal level continue to cloud the cannabis industry’s long-term future, the growth of the industry at the state level — as well as the Trump administration’s apparent disinterest in rolling back that progress — would seem to indicate that the cannabis marketplace will only continue to flourish thanks to increased marijuana investment.
Sessions might not like pot, but the general public’s comfort level with legal marijuana continues to grow. And as the public gets more and more comfortable with legal weed, so do investors.
Spurred by the irrefutable medical value of marijuana, an increasing number of traditional investors are jumping at the huge opportunity for high return assets. Not only is the total number of marijuana investment dollars significantly higher, but, so is the average size of raises — more than doubling from $3 million last year to $6.7 million this year — according to the Iridian Cannabis Deal Tracker, which tracks capital market activity in cannabis.
While the distribution of funds going to public and private companies has held steady since last year — publicly traded firms receive roughly 73 percent of the money — the sector breakdown has shifted. According to Benzinga, biotech and pharma industries easily led the way last year, trailed considerably by cultivation and retail. This year, retail has led the way, undoubtedly due to consumers’ clamoring for edibles and concentrates.
Just a few months ago, we pointed out that American dollars were being pumped into the legal marijuana market at an unparalleled clip. Well, we’ve reached another such clip.
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