The pockets of marijuana investors are getting deeper as more states warm up to medical and recreational marijuana, and pot entrepreneurs were trying their best to capitalize on the opportunity at the ArcView Investor Pitch Forum — an investment conference for marijuana businesses held in Denver's Exdo Event Center over the weekend.
During the event, companies with products ranging from miniature home-grow systems controlled by a smartphone to roadside THC tests pitched their businesses and future plans in a Shark Tank-like format. Entrepreneurs shared their ideas with an audience and three "sharks," who would ask questions about the presentation.
"Seminars like this will put the final nails into the coffin of marijuana prohibition," ArcView CEO Troy Dayton said. "We have a chance to build an industry here that commands respect."
Dayton says ArcView has connected 72 marijuana-related companies with hundreds of investors, raising more than $45 million in the process. He founded it in 2011 with California dispensary owner and marijuana celebrity Steve D'Angelo in the hope of speeding up the evolution of the industry.
"Every time I come to Denver, it's like a time machine into the future," D'Angelo said." I see things I've never imagined. All of the science and the influx of talent is truly inspirational."
Talent and innovation are key when starting a new business in such an unknown industry. Many Coloradans are well aware that $75 million-plus in taxes was brought in from primary marijuana businesses in 2014, but that total doesn't count secondary businesses pertaining to marijuana packaging, tourism, data analysis and more. Ancillary cannabis operations are expected to be a sizable part of a legal pot industry expected to generate $5 billion by 2017, according to the Marijuana Business Fact book, which maintains that 41 percent of ancillary pot businesses plan to expand this year.
Expansion doesn't come without its caveats. Almost every presentation noted "potential legalization" in prohibited states and "that banking thing." With marijuana still illegal federally, most banking institutions won't touch pot industry money out of fear of drug-laundering charges. Colorado and Washington are currently the only states with legal retail markets, with Alaska and Oregon expected to follow soon. Even with the hazy forecast, adult-use marijuana is expected to be on five to seven state ballots this November and capitalists are taking note.
"I'd say 80 percent of the attendees here are looking for a company to invest in," Dayton said. "The big numbers help. If you're investing in something so new and recently taboo, seeing how other investors operate might make you more comfortable going forward."
Eighteen marijuana companies showcased themselves for potential partnerships after passing a rigorous selection process just to get in the building. Once on stage, they had a little over ten minutes to present their business model, future plans and information about buying in. Other companies that sponsored the event, such as THC-infused coffee makers Jane's Brew or hempburger maker Good Seed, were also able to present their companies to investors — without three sharks to ask questions.
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"We got a 3.75 (out of five) in our audition, and just getting that was extremely hard," said Meghan Larson, CEO of Adistry, one of the pitching companies. "We're looking for all of it: advice, advertisers, publishers, investors. It takes a community to raise a small business if you don't want to remain one."
Dayton said the some of the sharks, most of them already successful pot entrepreneurs, were looking to invest in the presenting companies. Instead, they asked questions that new investors might not think about. One of the sharks, Frank Marino, a former investment banker and now CEO of the Marijuana Investment Company, said he looks for experienced management teams and an eye for national growth when considering new partners.
"Over the last few years, more and more real professionals who are very dedicated have come from other industries and have been flooding this industry," Marino said. "Every time I come to one of these events, I see an upgrade in the people involved and the business plans are evolving."
Eight of the businesses looking for funding are based in Colorado. Although he couldn't get into specifics, Dayton said he'd be very surprised if all of them didn't walk away with more funding.
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