Legal Cannabis Startups Are Booming

Legal cannabis is arguably the fastest-growing industry in the U.S.

Research by ArcView Group shows the legal marijuana market reached $2.7 billion in 2014, up 74% from $1.5 billion in 2013.

To me, the trend seems clear. We’re heading toward nationwide legalization for medical use, and recreational may not be far behind.

States are broke. They can’t afford to arrest people for pot anymore. Legalization (and the tax dollars that come with it) is becoming a more and more attractive option.

Even mainstream doctors are admitting that medical applications are real. If you haven’t seen Dr. Sanjay Gupta’s mea culpa on the topic yet, give it a read.

Investors certainly think something is happening…

Just last week, I spoke with the managing partner of a well-known Silicon Valley VC firm – one of the few that have invested in medical marijuana startups – and let me tell you, the numbers are staggering.

The startup we discussed (confidential) is growing at around 65% month over month. Less than a year old, the company’s already reached a mid-seven-figure annual revenue run rate. That kind of growth is rare even in Silicon Valley.

Opportunities for legal cannabis companies are only increasing. Studies suggest the market could reach $8 billion by 2018.

Today, more than 126 million Americans live in a state where marijuana is legal – either for medical or recreational purposes.

California makes up almost half the revenue today, as this chart from ArcView shows:

0415EI_Cannabis

A multibillion-dollar industry that’s growing 74% a year. And it’s still in its infancy.

Growth like that is why legendary investor, billionaire and PayPal Founder Peter Thiel recently wrote his first check in the space.

It’s certainly not a “passion project” for Thiel, who is no pothead. He’s investing because there are fortunes to be made. That’s what Peter Thiel does.

Y Combinator, the top “startup accelerator” program in the world, also just backed its first marijuana startup, Meadow, which offers medical cannabis delivery.

Big smart money has officially dipped its toe into this controversial space. From what I’ve seen, the water’s quite nice. Even taking legal risks into account.

An opportunity like this comes along once in a blue moon. It’s not every decade that a billion-dollar industry goes from being illicit to legit.

Last time something like this happened was when the government declared the end of Prohibition. The companies that thrive today could be the Anheuser-Busches of tomorrow. Savvy startups have begun to brand their products, even bringing on celebrity endorsements.

And let’s not forget the medical applications of cannabis, which are very real and well documented.

Look at the case of Charlotte Figi, who was diagnosed with a severe form of epilepsy before her first birthday. Even with heavy use of prescription sedatives, which are highly addictive, she had up to 300 grand mal seizures per week.

Today, Charlotte has fewer than three seizures a month thanks to the medical marijuana she takes. According to her parents, it’s completely changed her life.

And unlike the highly addictive medications she was taking, it doesn’t affect her behavior negatively. Charlotte takes a special strain of cannabis that’s extremely low in THC (the ingredient that gives users their “high”), but rich in CBD, which is a powerful anti-convulsive agent.

Charlotte’s case is part of what helped change the mind of CNN’s Dr. Sanjay Gupta. Here’s an excerpt from the TV doctor’s mea culpa I mentioned earlier:

Take the case of Charlotte Figi, who I met in Colorado. She started having seizures soon after birth. By age 3, she was having 300 a week, despite being on seven different medications. Medical marijuana has calmed her brain, limiting her seizures to two or three per month.

I have seen more patients like Charlotte firsthand, spent time with them and come to the realization that it is irresponsible not to provide the best care we can as a medical community, care that could involve marijuana.

We have been terribly and systematically misled for nearly 70 years in the United States, and I apologize for my own role in that.

Strong words from one of the nation’s most trusted medical voices.

Shifting opinions among leading doctors like Dr. Gupta are part of the reason I’m bullish on medical marijuana.

But if you’re looking to invest, I’d avoid the publicly traded companies out there. I’ve looked at most of the stocks and don’t see much promise.

As with many markets today, the best options are private and therefore off-limits to most investors.

Non-accredited investors who want to invest in legal cannabis may not have to wait long for opportunities, however.

I’m hearing that good progress is being made in bringing private market access to the masses. It could be live as soon as this summer. So stay tuned, we’ll keep you updated as we near the big event.

Would you invest in a legal cannabis company? Let us know in the comment section below.

  • beamondo

    Yes, I would . dbb

  • jan bean

    Put me on the investing list. No problem

  • Ferlisa Lee

    Yes I would invest I would love too put me on the list

  • Kathleen

    Absolutely! Please put me on the list!!! Do you have the name of a company at this time?

  • Tammy

    Yes, as long as I could afford the stock. Put me on the list!

  • Dennis Smith

    Yes I would definitely be ready for that

  • John Nine

    Yes., I would be interested in investing and I am accredited.

  • JOSEPH

    HOW DO I GET STARTED .DO YOU RECOMMEND AND TELL UWHWT TO DO .I DON’T SEE ANY BUY RECOMMENDATIONS .I am an accredited investor

  • Alejandro Azcona

    Ley me know how to step in…

  • Angela Simms

    Yes I would that was silly question.

  • Angela Simms

    How about this what if I ask that whole country that question, How many people do think would say yes to that we should share that question.? and how many would say no to it maybe 7% what do you think.?
    Mr. Adam Sharp.

  • Bruce Bailey

    Definitely Yes for many, many, years i believed that the day would come that marijuana would be legal for medical & or recreational use. Sign me up !

  • LRO

    Non-accredited investor; i’m a conservative investor and otherwise. There are pitfalls and risk for most high profits. But i hope to get in soon high returns.

  • Jennifer Badger

    Grant Dobson here. I have been a member of the Normal– National organization for the reform of Marijuana Laws since 1975. Ive waiting for this to happen,,,Penny stocks going nuts!! Please get back to me via phone as I am better “face to face” so to speak. Thank you.