Investors continue to gain confidence in the cannabis industry despite its federally illegal status. In California, where medical marijuana has been legal for two decades, the startup company Eaze has shown incredible promise since its initial launch in 2014, having already raised $25 million in seed capital and series A and B funding rounds. The recent series B round was officially closed on October 24, 2016 and tallied an impressive $13 million, a figure practically unheard of within the cannabis industry. While some consider Eaze more of a tech startup than a cannabis startup, they wouldn’t be in business were it not for the demand, plentiful supply, and socially acceptable nature of medical marijuana in the state of California.
An App That Connects Medical Marijuana Customers to Local Dispensaries for Delivery Service
With the help of a smartphone and the Eaze app, medical marijuana customers can order their choice of smokable marijuana products or choose from a selection of edibles. Eaze then connects users to a local dispensary which provides delivery service in around 15 minutes. This business model allows Eaze to avoid the legal ramifications and licensing required to directly handle marijuana. The idea seems to be catching on, as several additional startups are following in Eaze’s marketing path.
Marijuana’s “Semi Legal” Status No Longer a Deterrent to Investors
Although still federally illegal, the changing climate towards full legalization in Colorado, Washington, Oregon and Alaska has helped soften the overall perspective towards marijuana investments. Billionaire and PayPal co-founder Peter Thiel’s $75 million holding company for businesses within the cannabis industry has also drawn the attention of previously skeptical investors. Legal concerns expressed by Google and Apple (who have restricted the presence of the Eaze app within their online stores) do not seem to be deterring investors either. Eaze’s series A and B investors included Fresh VC and DCM Ventures. The rapper Snoop Dog got involved in Series A funding through his weed fund known as “Casa Verde Capital”.
An Already Expanding Industry Poised to Explode With Growth
As of October 2016, Eaze has expanded its services to almost 100 cities in the state of California. The cannabis industry as a whole is expected to expand from its current status as a $7 billion industry to $50 billion by the year 2026. Proposition 64, which would legalize recreational marijuana use for all adults over the age of 21 in California, is on the November 8th ballot. Should Proposition 64 pass, the industry is almost certain to explode at an even more dramatic rate, as California is said to contain the largest marijuana market in the country. Early investors within the cannabis industry indeed seem poised to make incredible amounts of money in a short period of time.
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