The one salient fact to emerge since legalization in California is that cannabis is Big Business.
This was clearly illustrated when no less than 275 entrepreneurs and investors recently converged on the Fairmont Miramar Hotel in Santa Monica to pitch their weed-related gadgets and to open their check books at a “shark tank-style” investor pitch forum organised by the Arcview Group.
Now, in its third year, the Arcview forums are regarded as barometers of what’s hot and what’s not in the cannabis industry.
Instead of a gathering of laid-back pot-heads, the shark tanks are attracting a new generation of smartly dressed guys, with check books in hand, who can smell the money that the legalized marijuana industry is about to unleash.
Cashing in on cannabis
The “sharks” listened to the sales pitches of hundreds of companies and were hopeful of cashing in on cannabis by finding the vision in which to invest that would make them a fortune.
The winning pitches were made by the following companies:
ARC Innovations walked away with the coveted $50 000 first prize for its electric pipe which retails for $199.
ARC founder, 28-year-old Lou Cirillo, explained that the idea formed on a ski slope. The product designer and computer engineer said the idea was sparked when he saw his friend battling to light a pipe while seated on a ski-lift.
Perhaps Cirillo’s recipe for success was when he explained to delegates that the electric pipe with a built-in lighter does not “touch the flower” and therefore does not transgress and federal or state regulations.
Cirillo said ARC Innovations had already received good feedback about the product, and that the company had also received verbal offers from investors.
Second prize went to a home-based “plug-n-plant” system developed by the Israeli company, Leaf. Retailing at $2 990, leaf co-founder, Yoni Ofir, told delegates to think of the system as “a beautiful fridge that stocks itself with cannabis”.
The streamlined white box is an automated mini-fridge. Controlled via a smartphone, that allows users to control lighting and nutrients, the “plug-n-plant” machine does not “touch the flower” and can also be used to grow other plants such as herbs and strawberries.
Appeal for investment
Appealing for investment funding was Access SF who wants to license and build a 4 350-square-foot dispensary in San Francisco. The company needs financing to automate its cannabis-infused gummy candies, vape pens and sublingual cannabis sprays production factory in Los Angeles.
The spotlight also fell on portable vaporizer pens when Danie and Ari Freeman pitched Indose. Designed to look like a medical device, the vaporizer has metered dosing.
Described as one of the most rapidly expanding segments of the weed retail market, vaporizer pens heat marijuana flowers, or concentrated oils, allowing consumers to inhale the steam.
But, according to Cirillo, research has shown that vape pens are purchased for convenience and not necessarily because users choose to inhale vaporized fumes over smoking.
Also in high demand are low-potency consumables such as gummies which are infused with accurate and controlled dosages of weed.
Legalization is not without barriers
One fact that became crystal clear at the convention was that there are many barriers to overcome to launch a cannabis product, despite legalization in states throughout the country.
Yes, obviously there is money to be made, and plenty of it, but industry players must first navigate legal pitfalls.
Perhaps the biggest issue facing the marijuana industry is that while states have legalized recreational cannabis, the federal government still regards weed as illegal complicating the legalities of launching a business and adhering to confusing and ever-changing rules and regulations.
Is the weed industry race and gender biased?
The convention also brought to the fore the question of race and gender bias because of the obvious lack of presence of both people of color and women. All of the companies pitching were represented by men, as were all their team executives.
Arcview’s CEO, Troy Dayton, admitted that the lack of representation was a “blind spot”, but said that these could be adjusted by having more females voicing their points of view.
But the women did have their say at a female-only lunch, and to which the media was not invited. The event was hosted by an investor, Barbara Koz Paley, Diane Czarkowski, co-founder of Canna Advisors, and Jeanne Sullivan, Arcview’s director of capital formation.
The way forward
Dayton points out that in 2017 total investments in the marijuana industry reached $500 million, while expectations are that direct sales of weed and related products will generate $20.8 billion by 2021. This, he says, represents a total contribution of nearly $40 billion in the U.S. economy.
Rhetoric such as “now is marijuana’s moment” and “cannabis is the one thing we can all agree on right now” was espoused by the CEO of the cannabis delivery app, Eaze, Jim Patterson.
Just as cannabis is changing the face of mainstream profits, so too is its character. Delegates to the convention were obvious in their reluctance to use terminology such as “getting high” and “smoking weed”, and rather placed the emphasis on the health and mental benefits of marijuana. This transformation was evident in the rather formal and sedate dress code of most people present, who included delegates such as beneficiaries of trust funds, retired gas company executives, and former law enforcement officers.