Investors are pouring money into consumer cannabis startups.
While the cannabis industry is still nascent — THC, the main psychoactive component of the plant isn’t federally legal in the US — consumer brands are rapidly carving out market share in an attempt to dominate the early innings of what some Wall Street analysts say could be a $194 billion global industry by 2030.
But figuring out what consumers want out of a cannabis brand is an ongoing challenge, many of the investors have told Business Insider. Without historical data to go off of, it boils down to somewhat of a guessing game with investors using their network — and their intuition — to help figure out the right bets.
That, however, hasn’t stopped VCs from dumping money into startups that they feel will win the battle. There are some trends emerging too: for one, there’s been an explosion in cannabis startups focused on the higher-end female crowd, like High Beauty, which makes luxury CBD-based skincare products.
Others, like Dosist, are targeting newer consumers who want to use cannabis to help them sleep, relax, or even get aroused by precisely controlling the dosage and chemical profiles of the cannabis strains they offer in their vape pens.
And investing in cannabis does come with some specific challenges for the mainstream VCs. Many of the larger VC funds are unable to participate in the industry as they’re backed by institutions like pension funds who don’t want to risk a gamble on a federally illegal industry.
That’s carved out an area for niche funds that focus specifically on cannabis to access the most deals.
Business Insider surveyed 12 of the top cannabis investors about which startups they think will blow up or raise fresh rounds this year.
Here are their picks: