The marijuana startup space

Last month, recreational marijuana use became legal in the Australian Capital Territory (akin to Washington, D.C.). Medicinal marijuana was already legal both at the Australian State and Federal levels. Globally, there are currently four countries, and 11 U.S. states and districts, in addition to ACT, where recreational use is now legal, and another 23 countries and 33 U.S. states where medicinal use is legal. This global trend is leading to a surge in cannabis-focused startups; however, there are still large structural inhibitions. For example, if you are even remotely connected to the cannabis business in the U.S. (say, you make an ERP that can be used to track plants from “seed to sale”) it can be very difficult to acquire even basic services. Opening a bank account, hiring an accountant, retaining lawyers, etc…, are all challenging, because these traditional institutions are worried that the current laissez faire attitude of the U.S. government could change at a moment’s notice, resulting in asset forfeitures or even jail time (remember, this is all still technically illegal at the U.S. Federal level). What that means is, while it’s still a huge gamble for exactly those reasons, now is a great time to invest in cannabis-focused startups, because valuations are low compared to other sectors, given this fundamental risk.

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