Business Startups Venture

This Cannabis Startup’s Big Haul Underscores Rising Venture Interest

Is investing in cannabis startups becoming more mainstream? Judging by the participants in one California company’s first round of funding, we’d say so.

Yesterday, San Jose, California-based Caliva announced it raised $75 million in an “oversubscribed” financing. What makes the round interesting is who invested in the company. Both Carol Bartz, former CEO of Yahoo and Autodesk, and three time Super Bowl MVP and Pro-Football Hall of Famer Joe Montana, participated in Caliva’s initial round of funding.

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Caliva makes a plethora of cannabis products for consumers, and saw its revenue surge by 350 percent in 2018, according to its press release. The company has over 440 workers and currently has two operating locations in the Bay Area. It plans to use the capital infusion to expand its product line and open up its own branded retail stores in California. Caliva also plans to expand wholesale distribution of its products and add direct-to-consumer channels. Currently, the company’s products are sold out of its flagship dispensary in San Jose, in dispensaries throughout the state of California, and online.

“I know great opportunities when I see them,” said Bartz, who will also join the startup’s board, in a written statement. “I believe that Caliva will be the first true large scale consumer product company in the U.S. cannabis industry.”

Meanwhile, Montana believes cannabis can help deflect opioid use or addiction, which has only grown in recent years.

“As an investor and supporter, it is my opinion that Caliva’s strong management team will successfully develop and bring to market quality health and wellness products that can provide relief to many people and can make a serious impact on opioid use or addiction,” he said in a statement.

A growing number of states are legalizing recreational consumption of cannabis, following a larger number of states that have made cannabis available in medical contexts, or have decriminalized possession of the drug.

The trend of high-profile executives, athletes and celebrities pumping money into cannabis-related companies continues to grow. As does spend in the sector. Worldwide legal cannabis spending spiked to $12.2 billion in 2018 and is projected to grow 38 percent to $16.9 billion in 2019, according to cannabis research firm ArcView Group. This is a significant jump from $9.5 billion in 2017.

And if you need further evidence that cannabis is no longer a dirty word, former House Speaker John Boehner last October was part of “a team of presenters leading a free online event for budding (no pun intended) cannabis investors,” according to this Forbes piece. The industry is also drawing attention from a wide variety of perhaps unexpected investors including Law and Order creator Dick Wolf and former NBA players Oscar Robertson and Cliff Robinson, among others.

Last October, I wrote about how a company that tracks and traces cannabis plants and products across the supply chain raised $50 million in a growth funding round led by global investment giant Tiger Global Management and rapper/investor Snoop Dogg’s Casa Verde Capital. Lakeland, Fla.-based Metrc was founded in late 2013 to serve Colorado’s cannabis enforcement division. (For those who didn’t know, Colorado was the first state to establish a recreational cannabis market).

Also last June, our own Savannah Dowling put together a list of the “top 10 cannabis startups with the most green.” Back in January, directly following the legalization of cannabis for recreational use by adults, Savannah also reported on the state of the cannabis industry. She found that the industry “was attracting a lot of attention in media and among adults looking to explore cannabis for entertainment and medical purposes.”

Illustration: Li-Anne Dias