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The top 12 venture-capital firms making deals in the booming $75 billion cannabis industry

Casa Verde Capital counts Snoop Dogg and Goldman Sachs veteran Karan Wadhera among its partners.

Casa Verde Capital counts Snoop Dogg and Goldman Sachs veteran Karan Wadhera among its partners.

Location: Los Angeles

Deal Count: 15

Los Angeles-based Casa Verde Capital has made 15 venture investments in the cannabis industry, according to Karan Wadhera, the firm's managing partner. It was founded in 2015 by a team that includes the rapper Snoop Dogg, but it really started building out its portfolio in the summer of 2016, Wadhera said.

Like other US-based firms, Casa Verde invests in ancillary businesses, including Dutchie, an online-ordering platform, and Eaze, a cannabis-delivery company.

"The ancillary space presents some of the most compelling investment opportunities," Wadhera told Business Insider. "These businesses are especially exciting as they can scale the quickest with the smallest amount of capital."

In June, Casa Verde participated in a Series A funding round into Oxford Cannabinoid Technologies, a biotech startup researching cannabinoid medicines, along with the venture arm of the tobacco company Imperial Brands.

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Altitude Investment Management is a New York City-based firm that's raised $25 million.

Altitude Investment Management is a New York City-based firm that's raised $25 million.

Location: New York

Deal Count: 15

The New York City-based Altitude Investment Management has made 15 deals since the firm's launch in 2017, according to Jon Trauben, a partner in the firm.

Altitude invests in ancillary companies, with a focus on data and analytics.

"Data and clarity in the cannabis market is lacking, so having a strong network to tap into is essential," Trauben told Business Insider. "We think it's critical to invest in the industry on a portfolio basis to diversify exposure and manage known and unknown risks."

Altitude's portfolio consists of startups across a range of verticals, such as PathogenDx, a DNA-testing firm geared toward cannabis; Flowhub, a point-of-sale-software service for dispensaries; and Green Flower, a digital-media outlet.

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Merida Capital is a New York City-based fund that invests in later-stage startups.

Merida Capital is a New York City-based fund that invests in later-stage startups.

Location: New York

Deal count: 40

New York City-based Merida Capital has made 40 investments in 22 cannabis companies, Mitch Baruchowitz, a managing partner, told Business Insider.

Baruchowitz, a former corporate lawyer, founded Merida in 2016 after being involved in the cannabis industry since 2010. Unlike other firms on this list, Merida mostly invests in later-stage companies, rather than in seed rounds.

Baruchowitz believes two of the hottest areas to invest in the cannabis sector are agricultural technology and data analytics.

To that end, Merida has teamed up with private-equity fund Pegasus Capital to invest in Vividgro, a state-of-the-art lighting and growing system for indoor greenhouses.

Baruchowitz said data is going to be the "most disruptive" evolution of the cannabis market.

"When data becomes actionable, when the data sets become big enough, it's going to be like whiplash for the market," Baruchowitz said. "When data moves into the space, all of that historical or even instinctual behavior goes away."

Merida has made multiple investments in New Frontier Data, a cannabis-industry analytics firm, along with compliance platform Simplifya, among other investments.

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Illinois-based Salveo Capital has made 15 investments in nine portfolio companies, from payroll processing to DNA testing.

Illinois-based Salveo Capital has made 15 investments in nine portfolio companies, from payroll processing to DNA testing.

Location: Northbrook, Illinois

Deal Count: 14

Illinois-based Salveo Capital has signed 14 deals in nine portfolio companies in the cannabis industry since the firm was founded in 2016, according to Jeff Howard and Michael Gruber, Salveo's managing partners.

Salveo's portfolio includes ancillary startups like payroll firm Wurk and dispensary customer-relations platform Baker. It also invests in biotech startups like PathogenDx and Front Range Biosciences.

The partners said that in the run-up to full-scale legalization in Canada, the "floodgates of capital" have opened.

"VC's need to be nimble and quick enough to execute in a generally oversubscribed fundraising condition before valuations increase," they said.

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Lerer Hippeau Ventures is one of the few mainstream VC funds to write checks in the cannabis sector.

Lerer Hippeau Ventures is one of the few mainstream VC funds to write checks in the cannabis sector.

Location: New York

Deal Count: 4

Lerer Hippeau is one of the few mainstream venture-capital firms to invest in the cannabis industry.

To date, the New York City-based fund — perhaps most well-known for its high-profile investments in digital-media companies like BuzzFeed and Axios and the shoe brand Allbirds — has invested in four cannabis companies.

"We started paying attention when Colorado became the largest state to fully legalized cannabis," Eric Hippeau, one of the firm's managing partners, told Business Insider in an email.

"We see the opportunity in investing in basic blocks establishing the infrastructure of the industry," Hippeau said.

So far, the firm has invested only in ancillary companies, like Leaflink, a software platform for dispensaries; Herb, a digital-media company; and recruitment platform Vangst.

"Until cannabis is legalized at the federal level, we have decided not to invest in the product itself, with the exception of CBD products," Hippeau said.

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Green Acre Capital launched a $25 million cannabis-specific fund and has made successful exits in Tokyo Smoke and Anandia Labs.

Green Acre Capital launched a $25 million cannabis-specific fund and has made successful exits in Tokyo Smoke and Anandia Labs.

Location: Toronto, Ontario

Deal Count: 13

Toronto-based Green Acre Capital has made 13 investments in its $25 million Fund I, which is dedicated to cannabis. The firm just closed its Fund II at $75 million and is starting to make investments, Matt Shalhoub, Green Acre's managing director, told Business Insider.

Since the firm is in Canada, where marijuana is federally legal, the fund is free to invest in plant-touching startups like edible brands, cannabis retail stores, as well as hemp and CBD-infused products, Shalhoub said.

The firm had successful exits in Tokyo Smoke, a retail brand that was acquired by Canopy Growth, and Anandia Labs, a cannabis-testing firm that was acquired by Aurora.

"There has been a lot of volatility in the space, and people definitely need to have the stomach for large swings in either direction," Shalhoub said.

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Tuatara Capital focuses on building consumer-facing brands and investing in cannabis biotech companies working on cannabinoid therapies.

Tuatara Capital focuses on building consumer-facing brands and investing in cannabis biotech companies working on cannabinoid therapies.

Location: New York

Deal Count: 8

Tuatara Capital has made eight portfolio investments in the cannabis industry as of the end of September, according to Al Foreman, Tuatara's chief investment officer and a former JP Morgan investment banker.

The firm signed its first deal in 2015 and has made additional investments in a number of its portfolio companies, from consumer-facing brands like Willie's Reserve to biotech companies like Teewinot Life Sciences, which is developing patents for the production of cannabinoids from marijuana for pharmaceutical applications.

"We see the biggest opportunities in the industry as our ability to build and scale national and global cannabis brands, and also the opportunity to finance innovative companies and technologies that will ultimately impact the cannabinoid pharmaceutical and nutraceutical end-markets," Foreman told Business Insider.

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Florida-based Phyto Partners focuses on the ancillary side of the booming US cannabis industry.

Florida-based Phyto Partners focuses on the ancillary side of the booming US cannabis industry.

Location: Boca Raton, Florida

Deal Count: 13

Based in Florida, Phyto Partners has made 13 deals in the cannabis sector since the firm formed in 2014. It focuses on ancillary companies that provide software and services to the cannabis industry but don't touch the marijuana plant itself, Brett Finkelstein, the firm's managing director said.

"Not a lot of institutional or strategic capital was available to founders when we launched," Finkelstein said. "We wanted to get in early so we can have the most positive impact on companies we invest in."

Phyto's portfolio includes companies like Colorado-based Wurk, a payroll-management company for the cannabis industry, and Vangst, a recruiting firm focused on cannabis companies.

"If you strip away the hype around the cannabis industry, it's really no different from other more established sectors or business models," Finkelstein said. "In order to be successful, companies must have great leadership, produce a quality product, at a competitive price and sell/distribute as efficiently as possible."

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Poseidon Asset Management is run by a brother-and-sister team out of San Francisco.

Poseidon Asset Management is run by a brother-and-sister team out of San Francisco.

Location: San Francisco

Deal Count: 47

Founded by brother-and-sister team Morgan and Emily Paxhia in 2013, San Francisco-based Poseidon Asset Management has rapidly scaled up to become a leading player in the cannabis industry.

Not counting the firm's public market trading activity, Poseidon has made 47 venture investments in 35 portfolio companies with over $80 million deployed, Morgan Paxhia, the firm's cofounder and managing partner, told Business Insider.

Like some of his peers, Paxhia said he's "very bullish" on the ancillary sector of the industry.

"This is a broad category, as this can range from consumer devices to enterprise SaaS solutions," Paxhia said. "We see great return opportunities as VCs in this vertical."

Paxhia was quick to note that the fragmented nature and swiftly changing regulations of the cannabis industry make it challenging to run a fund.

"Yes, this industry is moving very quickly, but managing outside capital carries a lot of responsibility for the betterment of your investors and the legitimacy of the industry," Paxhia said.

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Slow Ventures was founded by a group of former Facebook employees and has invested in a few California-based cannabis startups.

Slow Ventures was founded by a group of former Facebook employees and has invested in a few California-based cannabis startups.

Location: San Francisco

Deal Count: 8

Like Lerer Hippeau, San Francisco-based Slow Ventures — which was founded by a group of former Facebook employees — is one of the few mainstream early-stage venture-capital funds to invest directly in the cannabis industry.

According to its website, Slow Ventures has, for example, put money into Eaze, a San Francisco-based cannabis-delivery service; Meadow, a delivery and point-of-sale system for California dispensaries; and Bloom Farms, a vaporizer company.

Beyond cannabis, Slow Ventures has made successful exits in Blue Bottle Coffee and home-automation company Nest, along with investments in the mattress startup Casper, Postmates, and Pinterest.

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Arizona-based Hypur Ventures has made eight ancillary cannabis-industry investments since launching in 2017.

Arizona-based Hypur Ventures has made eight ancillary cannabis-industry investments since launching in 2017.

Location: Scottsdale, Arizona

Deal Count: 8

The founders of Arizona-based Hypur Ventures first started looking at the cannabis industry in 2014, and the firm officially launched in 2017. So far, Hypur has signed eight deals, according to Tahira Rehmatullah, a managing director at the firm.

Rehmatullah told Business Insider Hypur is "vertical agnostic" when it comes to deciding which companies to invest in.

Rehmatullah said there are numerous opportunities across the cannabis industry for investors, including industrial hemp, software and tech firms, and CBD-infused products.

Hypur's portfolio companies include the data-analytics firm Headset, the compliance platform Simplifya, and online content platform Dope Media.

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The Arcview Group is a network of high-net-worth investors who have put more than $200 million in 190 cannabis companies.

The Arcview Group is a network of high-net-worth investors who have put more than $200 million in 190 cannabis companies.

Location: San Francisco

Deal Count: 190

The Arcview Group is a cannabis-industry heavyweight. While the company has multiple lines of business, including industry research, it organizes an investor network of high-net-worth people who have placed $200 million into a portfolio of 190 companies, according to David Abernathy, a vice president at Arcview.

On top of the investor network, Arcview manages special-purpose vehicles (SPVs) that pool capital from accredited investors. Through these SPVs, Arcview has made 26 investments in 16 companies, Abernathy said.

Arcview recently launched a more traditional managed fund, though it hasn't made any investments yet.

As with other US-based investors, Arcview is bullish on ancillary startups.

"There are some great potential investments in plant-touching businesses, especially emerging brands, but many of the businesses with the most growth potential are in various ancillary product and services categories," Abernathy said.

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