The legal marijuana business is a force seldom seen in capitalism these days. The amount of ancillary businesses sprouting from the state legalization of marijuana is hard to keep track of. Some of the larger companies are now getting on board since more than half the country has now legalized cannabis in some form and it looks like there is little federal government can do to interfere.
The creators of Twitter, Instagram and Uber are now turning their focus to marijuana and are going to attempt many projects all at once. One of those projects is a much needed breathalyzer system to detect active THC in a person’s system. Are you curious about what new applications this innovative company is going to come up with relative to marijuana?
AKLAND, Calif. — The storied Silicon Valley venture firm Benchmark Capital has launched a slew of tech companies: Twitter, Uber, Snapchat, Instagram. Now its search for the next big thing has led it to … pot.
Benchmark recently invested $8 million in Hound Labs, a startup here in Oakland that’s developing a device for drivers — and law enforcement — to test whether they’re too buzzed to take the wheel.
And that’s just the start. Wealthy investors are pouring tens of millions into the cannabis industry in a bid to capitalize on the gold rush that’s expected when California legalizes recreational marijuana on Jan. 1. They’re backing development of new medicinal products, such as cannabis-infused skin patches; new methods for vaporizing and inhaling; and “budtender” apps like PotBot, which promises to scour 750 strains of cannabis and use lab research, including DNA analysis of each strain, to help customers find the perfect match.
Among the noted investors: tech and biotech mogul Peter Thiel, who co-founded PayPal and made a fortune with the cancer drug startup Stemcentrx. Thiel contributed $300,000 to the California ballot campaign that paved the way for legalization. And in the first public endorsement of the industry from a major biotech investor, Thiel’s Founders Fund has sent millions to Privateer Holdings, a Seattle private equity firm that backs research into medical marijuana products, among other cannabis-related ventures.
Pot has been legal for medical use here since 1996, but with broader legalization, the industry is poised to explode. Experts say the market for marijuana and related products in California will reach $6.5 billion in 2020, and likely spark legalization efforts elsewhere.
“California is the sixth largest economy in the world. Colorado and Washington are pilot studies by comparison,” said Troy Dayton, CEO of The Arcview Group, an Oakland-based cannabis investment and research firm.
The federal Drug Enforcement Agency continues to classify marijuana — like heroin and LSD — as a Schedule I drug, defined as highly prone to abuse and having “no accepted medical use.” Attorney General Jeff Sessions has been a vocal opponent of marijuana legalization, but has not yet cracked down.
Given that most states have already legalized cannabis for medical use, and seven states plus the District of Columbia allow recreational use, most investors think that federal officials eventually will relent and regulate marijuana more like alcohol.