Venture capitalists are investing record sums in marijuana startups, growing twice as fast as 2018, Dan writes.
Why it matters: These investments are a bet that marijuana will be legalized in the U.S. at the federal level, as it has been in Canada.
By the numbers: The weed sector grew to $1.3 billion for this year through mid-June — up from $1 billion for all of 2018 and $370 million for 2017, according to PitchBook Data.
- Some of these investments are in actual cannabis growers, while others are in industry sidelines (logistics, finance, retail, accessories, etc.)
There's a catch: Legalization would expand the market for growers, but could render the related startups obsolete: Why would growers need cannabis-specific transportation companies if FedEx began working with them?
- That could vastly slow the industry's growth, since many of the biggest venture capital firms still avoid companies that "touch the plant" — to keep in good graces of law enforcement and more conservative investors.
The bottom line: Some services brands would survive legalization, just as wine stores persist in areas where wine is sold in supermarkets.
But many would disappear, making these days look like peak weed.