With clear growth potential, money is already pouring into legal cannabis production. Institutional investment tripled from an estimated $50 million in 2013 to $150 million in 2014. The ArcView Group, the leading cannabis-focused angel investment group, has seen their membership swell by 400% since January 2013.
Renowned investor Peter Thiel co-founded PayPal and made the first outside investment in Facebook. He gained his reputation by spotting early opportunities for outsized returns. Thiel’s Founders Fund recently contributed to a $75 million round of funding for Privateer Holdings, a private equity firm focused on the legal cannabis industry. This is a major move into the market from an institutional player, and a significant vote of confidence that legal cannabis is here to stay.
All of this is happening in an environment in which only five states have full-scale medical marijuana operations and only two states have active recreational dispensaries. However, 23 states have authorized the use of medical marijuana and four states plus Washington DC have created a legal pathway for recreational sales. As these other states roll out their operations, Duchess Capital Research estimates that the industry could see $1.7 billion in capital expenditures alone over the next 18 months.