On any given day, more than a million dollars worth of cannabis products are on the move at the Nabis warehouse in Oakland, California.
Products like cannabis-infused chocolate bars and berry-flavored vape cartridges sit on the shelves, waiting for pick-up, repackaging, and shipping to dispensaries across the state.
This movement of goods – facilitated by the Nabis’s own e-commerce platform it developed for its wholesale business-to-business model – is being fueled by a surge in cannabis use during the COVID-19 pandemic.
“One of the major things that happened for the cannabis industry was the fact that the industry was deemed essential and that allowed consumers to really start exploring cannabis products, and by offering so many different product categories and different product types, our -ecommerce business really picked up and more than doubled in the past almost one year,” Vince Ning, co-founder and CEO of Nabis, told Reuters recently, adding that before the pandemic Nabis only shipped closer to half a million dollars in products daily.
Now industry entrepreneurs, like Ning, and investors are gearing up for even greater growth as legalization spreads and the economy reopens.
So far, 36 states and the District of Columbia have approved medical use of marijuana, according to the National Conference of State Legislatures. Of them,15 states and D.C. have approved recreational use of pot.
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.
Ning said this momentum is giving investors more incentive to get involved.
“All of these sorts of tailwinds in the industry really created this sweeping deregulation effect and sentiment across the nation so investors are incredibly excited about the cannabis industry and the opportunities that a brand new industry can bring,” Ning said.
In one of the biggest venture capital deals in the sector to date, Oregon-based e-commerce platform Dutchie on Tuesday announced it raised $200 million in a funding round that values the company at $1.7 billion.
Dutchie’s investors include former Starbucks CEO Howard Schultz, NBA star Kevin Durant and DoorDash co-founder Stanley Tang. The company’s online marketplace connects cannabis dispensaries with consumers, who can order home delivery.
Reuters has identified more than 90 private and public cannabis tech companies in North America, with total private investment in the first quarter at the highest level in 18 months, according to data compiled by PitchBook and Crunchbase.
All told, investors have poured more than $2.5 billion into cannabis tech startups since 2018.
Public investors are piling in too. Special purpose acquisition companies, or SPACs, that target the broader cannabis industry raised at least $4.3 billion through early 2021, with $1.7 billion of that still waiting to be deployed, according to cannabis researcher BDSA.
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.
U.S. legal cannabis sales for both medicinal and recreational use last year jumped 45%, according to BDSA.
Others believe entry to the cannabis industry may not be quick or easy for many of the big outside players.
CELEBRITIES GALORE
Cannabis startup funding in the sector has been led by a closely knit network of investors that often co-invest with one another. That network includes Liquid 2 Ventures, headed by former NFL quarterback Joe Montana, and Casa Verde Capital, founded by entertainer Snoop Dogg.
Another of those firms, Beverly Hills-based Arcadian Capital, has invested in more than a dozen cannabis tech startups. Boca Raton-based Phyto Partners has funded 10, many of them as a co-investor with Arcadian.
The network occasionally is joined by other high-profile individual investors. DoorDash’s Tang and Twitch co-founder Justin Kan were among those backing Oakland-based Nabis, a cannabis online marketplace for dispensaries that also has a warehouse, delivery service and online financing for retailers.
Industry boosters say technology developed and incubated by the cannabis industry could open new pathways for retail trade in other sectors.
Socrates Rosenfeld, founder and CEO of Jane Technologies, the Santa Cruz creator of an e-commerce platform that has been funded by Arcadian and Gotham Green, called it “a once-in-a-lifetime opportunity.”
“The most cutting edge technologies, particularly in digital retail, I think will be born from the cannabis industry. And this is serving as a wonderful incubator for what the future of digital will look like,” said Rosenfeld, whose platform is being utilized by dispensaries like Harborside in San Leandro, California.
The dispensary made a deal with Jane Technologies, coincidentally at the start of the pandemic last year, for Harborside to use Jane for its website, allowing the dispensary to digitize its operations and allow customers to search the inventory for products and place orders from the safety of their own home.
via Reuters
