Courtesy of Dosist
- Investors are pouring money into consumer cannabis startups.
- While it’s still early innings, investors are trying to figure out which brands will take off and capture significant market share.
- We asked some of the top cannabis investors to pick out the consumer cannabis brands they think will blow up in 2019.
Investors are pouring money into consumer cannabis startups.
While the cannabis industry is still nascent — THC, the main psychoactive component of the plant isn’t federally legal in the US — consumer brands are rapidly carving out market share in an attempt to dominate the early innings of what some Wall Street analysts say could be a $194 billion global industry by 2030.
But figuring out what consumers want out of a cannabis brand is an ongoing challenge, many of the investors have told Business Insider. Without historical data to go off of, it boils down to somewhat of a guessing game with investors using their network — and their intuition — to help figure out the right bets.
That, however, hasn’t stopped VCs from dumping money into startups that they feel will win the battle. There are some trends emerging too: for one, there’s been an explosion in cannabis startups focused on the higher-end female crowd, like High Beauty, which makes luxury CBD-based skincare products.
Others, like Dosist, are targeting newer consumers who want to use cannabis to help them sleep, relax, or even get aroused by precisely controlling the dosage and chemical profiles of the cannabis strains they offer in their vape pens.
And investing in cannabis does come with some specific challenges for the mainstream VCs. Many of the larger VC funds are unable to participate in the industry as they’re backed by institutions like pension funds who don’t want to risk a gamble on a federally illegal industry.
That’s carved out an area for niche funds that focus specifically on cannabis to access the most deals.
Business Insider surveyed 12 of the top cannabis investors about which startups they think will blow up or raise fresh rounds this year.
Here are their picks:
Level Blends
Screenshot/ Level Blends
Startup: Level Blends
VC: Vikas Desai, managing partner at Welcan Capital
Relationship: None
What it does: Level Blends is a San Francisco-based company that develops and sells vape cartridges, sprays, and sublingual tablets that contain both CBD and THC.
Why it’s hot: "I’m very bullish on the sublingual category within cannabis," said Desai. "Consumers continue to look for other form factors and delivery methods beyond combustion, vaping and edibles. Sublinguals are easy, discreet ways to offer a faster onset time and offset time in a discreet and controlled manner."
Mary’s Medicinals
Mary’s Medicinals/ Screenshot
Startup: Mary’s Medicinals
VC: Todd Harrison, chief investment officer at CB1 Capital
Relationship: Investor
What it does: Mary’s Medicinals CBD and THC containing consumer products, including vapes and tablets, as well as cosmetics and pet care products. The startup also has a line of CBD-infused women’s cosmetics at Saks Fifth Avenue.
Why it’s hot: "In addition to a growing chorus of raving fans, the company is exploring use-cases with the minor cannabinoids, which promise an array of new therapeutic benefits," said Harrison.
Leune
Leune/ Screenshot
Startup: Leune
VC: Karan Wadhera, managing partner at Casa Verde
Relationship: None
What it does: Leune is a female-focused, Los Angeles-based cannabis brand that sells pre-rolled joints and vaporizer pens.
Why it’s hot: Leune "represents the Cannabis 3.0 consumer," said Wadhera. "It has beautiful, small footprint packaging, high aesthetic, and a consistent quality product."
See the rest of the story at Business Insider
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Source: Business Insider – jberke@businessinsider.com (Jeremy Berke)