"When it did become legal, we were talking to various different investors at the time," said Josh Gordon, CEO of RoDawg, a "lifestyle brand" creating smoker accessories, including designer joint cases. "From an investor's point of view, it brought the whole lofty goal into reality. And that's something we've noticed a lot, post-legalization."
Gordon's company will be one of about 10 startups gathering in Seattle Jan. 28 for a quarterly investors meeting organized by The ArcView Group, a San Francisco-based cannabis industry consulting firm founded in 2010 that has an "angel" investor network focused on that market. About 25 investors will attend, with an interest in participating in the marijuana gold rush that some are hoping for.
"We bring together investors and companies and angel networks," said Troy Dayton, CEO of The ArcView Group, which is organizing the private meeting at the Washington Athletic Club in downtown Seattle.
"We focus exclusively on businesses that do not touch cannabis directly," Dayton said. "Mark Twain had a really great quote. He said, 'During the gold rush is the best time to be in the pick-and-shovel business,' and it's the same idea here. There's a lot of services that serve this industry outside of ones that would touch cannabis directly, which, of course, is outside of federal law."
Washington state voters passed Initiative 502 in November, but it remains unclear how the state law will work with federal law prohibiting marijuana use. Gov. Jay Inslee and Washington state Attorney General Bob Ferguson were in Washington, D.C., recently to meet with the Justice Department on the issue, but that didn't result in a lot of clarity. Still, Inslee has instructed the state to move forward in creating rules for production, distribution and retail sales of marijuana in Washington state.
"I will make sure, to the extent humanly possible, that this initiative moves forward," he said.
Despite any uncertainty, the investors meeting has attracted the interest of people from around the country, and even internationally. RoDawg is based in Miami, although Gordon currently lives in New York. An investor from France will attend, as will a representative for Heliospectra, a Swedish company that develops LED lights for greenhouse growers.
While in Seattle, Heliospectra will pursue funding for a new U.S.-based subsidiary focused on marketing to the needs of marijuana growers. The company is seeking $2 million for 40 percent equity in the new company, said Chris Walker, Heliospectra's U.S. Representative.
"Investors are going to come out of the woodwork," Walker said. "Seattle is going to happen, in terms of investor money."
All of the businesses and investors gathering in Seattle are focused on ancillary marijuana businesses; instead of trying to sell or directly touch the product, they are indirectly serving the same customer base.
It's a step removed from production and distribution. That is more comfortable for investors, who are interested post-I-502, but not always ready to dive into the market, said Gordon of RoDawg. After all, people who work in the marijuana space are combating an image problem.
"As much as there is a lot more investor interest, there still is a lot of speculation," Gordon said. "(Legalization) doesn't mean people are throwing their money at (the industry). In terms of a safe investment in this industry, it's very hard to find professional people who you can trust with your money."
That's one reason Gordon, a recent MBA graduate of Fordham University in New York, is trying to distinguish his brand from the traditional tie-dyed perception of marijuana-related businesses. RoDawg is a brand that he describes as "fashionable" and "upscale" - a cross between the Marlboro Man and Tommy Hilfiger. He's trying to create products that will appeal to discerning young professionals as marijuana becomes more socially acceptable.
Gordon envisions opportunities to design packaging and branding for the medical marijuana market, along with the mainstream consumer market.
The overall shift in public opinion in recent years has lent credibility to these entrepreneurs. Jason Levin, another entrepreneur attending the meeting, has a new company called UpToke. He has created a portable vaporizer for smoking marijuana that's about the size of a cigar.
"We have former Apple engineers that are working (on the design)," Levin said.
Hiring such high-quality engineers to work on his product would have been impossible five years ago, he said.
"It's now starting to be viewed as a real business, or a real industry that should be as respected as the tobacco or alcohol industries," Levin said.
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