Here Come the Marijuana Money Managers

I am really excited about a material change that has positive implications for the cannabis industry, as several new companies have formed that will invest in the cannabis industry on behalf of their clients. I am calling this group the 'Marijuana Money Managers', and it's about time. As one who has followed the cannabis capital markets since early 2013, I have been disappointed with the slow development. The publicly-traded companies remain relegated to the OTC Markets rather than the NYSE or NASDAQ, and most of them still appear to be illegitimate, though a few have certainly made great progress. Private companies continue to struggle to raise capital. While there have been several high-profile deals, including the highly publicized investment by Founders Fund into Privateer Holdings earlier this year, most companies operating in the space are having trouble finding outside investors. Federal illegality, state and local ownership restrictions and stigma issues have all contributed to a situation where the market is highly fragmented and has been devoid of institutional sponsorship for the most part.

A year ago, when asked about companies or organizations that could help investors looking to invest in the cannabis industry, I had few obvious answers. Pioneers ArcView Group, the angel network focused on the cannabis industry, and Privateer Holdings, the private equity firm that owns Leafly, Tilray, the Canadian licensed producer, and, now, Marley Naturals, the global brand, were some of the only choices. Today, I count 11, which we have listed at New Cannabis Ventures, and I expect this number to grow dramatically in the coming years. A good example is Tuatara Capital, a NYC-based investment advisor, which filed with the SEC in late July that it had raised in excess of $25m. These organizations are just getting started deploying capital.

Tuatara Capital Team

It's one of the primary goals of New Cannabis Ventures to help increase the awareness of this growing group of companies focused on helping to fund the cannabis industry. Institutional investors will not only help support the companies that merit investment, but they will also raise the bar on issues like corporate governance and transparency. Perhaps more importantly, the presence of institutional investors is likely to encourage other institutional investors to focus on the space and to give confidence to additional investors who don't have the time or capability to self-direct their investments but are looking to take advantage of the 'Green Rush'. Investing in private placements is challenging enough for individuals to do on their own, and the complexities of the rapidly changing cannabis industry make the task even more daunting. Entrusting one of these new 'Marijuana Money Managers' could be a great option for many investors.

Posted to Your Cannabis Analyst on Aug 31, 2015 — 2:08 PM
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