Cannabis entrepreneurs, celebrity investors light up as legalization blooms

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.

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.

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.

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.