CULTIVATED: Top VC firms like Greycroft and Lerer Hippeau are cautiously opening their doors to cannabis, Arizona jumps in to pot-infused beverages

Jeremy Berke

Aug 9, 2019, 22:09 IST

CULTIVATED: Top VC firms like Greycroft and Lerer Hippeau are cautiously opening their doors to cannabis, Arizona jumps in to pot-infused beverages

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Happy Friday,

I hope everyone has a plan to beat the heat this weekend. I'm looking forward to surfing out at Rockaway Beach - conditions are lining up nicely!

Let's get to it:

This week, we put out a deep dive into how the world's biggest venture firms are cautiously opening their doors to the cannabis industry. At the heart of the story is how VC firms are governed by their investors, known as limited partners, who aren't yet convinced about cannabis. More on that below.

In other news, some Canadian cannabis producers are making money, while others are still suffering from fall out over poor corporate governance.

Aurora Cannabis stock popped after the company gave an update on its Q4 earnings.

Cronos Group, part-owned by Altria, made its first foray into the US earlier this month with a $300 million deal to purchase CBD company Redwood Holding Group. Cronos Group's stock dropped yesterday despite surpassing the highest analyst estimate for its second-quarter figures.

And Markets Insider's Ben Winck has more on the CannTrust saga. Its auditor, KPMG, withdrew results for the company's most recent quarterly and full-year earnings and the stock tumbled.

-Jeremy

More stories from around the BI newsroom:

'It's a once in a decade opportunity': How top VC firms like Greycroft and Lerer Hippeau are cautiously opening their doors to the potentially $194 billion cannabis industry

The Sand Hill Road set is cautiously opening their doors to the booming cannabis industry by investing in cannabis-related technology, but they aren't touching pure marijuana brands yet.

A venture firm's relationship with its investors, known as limited partners, often holds them back from making marijuana investments. Institutional VCs have been reticent regarding cannabis because LPs often have "vice clauses" banning investing in firearms, gambling, tobacco, and alcohol.

I spoke with partners and principals at some of the world's top VC firms, including Lerer Hippeau, Greycroft, and Tusk Ventures, about how they're looking at cannabis.

Arizona Iced Tea is pushing into legal cannabis. Here's how its partnership for pot-infused gummies and drinks came about.

The maker of Arizona Iced Tea just became latest consumer giant to push into the cannabis industry. The company said on Wednesday it was partnering with Denver-based cannabis company Dixie Brands to produce THC-infused vape pens, gummies, and drinks in states where the substance is legal for adult use.

I spoke to Dixie Brands CEO Chuck Smith about how the partnership came about.

Cannabis-related job searches have skyrocketed over 650% in the past 3 years. Here's who's hiring and what skills you need to get in.

Cannabis-related job postings in the US have quadrupled in the past three years as more states legalize the drug, according to a new report from the job site Indeed.

Capital raises, M&A activity, partnerships, and launches

Henry's Original, a California cannabis brand, closed an $11 million Series B led by Merida Capital Partners.
Wholesale cannabis marketplace LeafLink closed a $35 million Series B, led by Josh Kushner's Thrive Capital. The round included Lerer Hippeau, Nosara Capital, L2 Ventures, and others. I covered LeafLink's $10 million Series A back in 2017.
Silver Spike Acquisition Corp, a cannabis SPAC, announced a $250 million IPO on the NASDAQ. The IPO will be underwritten by Credit Suisse.
Canadian cannabis producer The Green Organic Dutchman (TGOD) has filed an application for a NASDAQ listing.
NASDAQ-listed hemp company Arcadia Biosciences is entering a joint venture with Legacy Ventures Hawaii to produce hemp products in the island state.
TerrAscend is acquiring 100% of Ilera Healthcare, a Pennsylvania medical cannabis company, for up to $225 million in cash and stock.
Agritek Holdings Inc has signed a letter of intent to acquire Apex Solutions Inc, a California cannabis company.
Cannabis real estate firm Innovative Industrial Properties reported Q2 earnings. The company generated $8.3 million in rental revenues in the quarter.

Executive moves

Daniel Yi, a former communications exec at MedMen is moving over to the Shryne Group where he'll be the chief communications officer.
Acreage Holdings hires Steve Hardardt as chief people officer. Hardardt previously ran his own consulting and executive coaching firm.
Former Medreleaf CEO Neil Closner will become the new CEO of LAVVAN Inc, a company working on "fermentation-based technology to unlock the full potential" of cannabinoids. He'll be joined at his new company by seven former senior Medreleaf employees. LAVVAN recently entered into a partnership with Amyris.

Chart of the week

This one comes from the data provider Pitchbook. VC investors have poured $1.6 billion into cannabis startups as of July, up from $1.2 billion for all of last year. In 2013, that number was only $16 million.

That's an astonishing increase in only six years. I expect that number to increase more year-over-year as the world's largest VC firms figure out ways to invest in cannabis companies while staying onside of federal regulations and their LPs get more comfortable with the industry.