Marijuana legalization has led to full availability of cannabis in Colorado, Washington, Oregon, Alaska, and the District of Columbia; and more than 20 states now have medicinal marijuana laws on the books that allow for people with prescriptions to legally use cannabis as medicine. Demand for marijuana is growing as a result.
In 2014, the cannabis industry, which also includes manufacturers of products like vaporizer pens used for inhaling cannabis, enjoyed more than $2.4 billion in sales. That marked a 74 percent increase in sales over 2013, and revenues are only predicted to increase every year for the foreseeable future with double-digit gains expected annually by industry experts.
With so much money to be made in the marijuana industry, it's no surprise that many start-ups are being launched to try and rake in some of the money that there is to be made, from the relatively new medical and legal recreational cannabis industry. What may be surprising is how many of these companies have a Silicon Valley tech component to them, or are being backed by tech giants and large investment companies.
Here are some of the start-ups that are gaining attention in the industry:
- HelloMD. HelloMD is a tech start-up that allows people who are suffering from medical problems to meet with a physician over the Internet to discuss their symptoms. Using video chat technology, doctors and patients can see each other throughout the consultation. The physician then determines whether or not a patient qualifies for medical marijuana. If they do, a prescription is provided and the marijuana and a vaporizer pen are delivered. The service is beneficial for people who are unable to visit a physician due to time constraints or medical problems.
- Weedmaps. WeedMaps is a website that can be compared to Yelp, only instead of providing reviews of businesses, it provides information about marijuana dispensaries. People can use the app and website to find the nearest dispensary, get contact information and hours, and read reviews from other users.
- Meadow. Meadow is a business similar to HelloMD that provides diagnoses and prescriptions for medical marijuana and then delivers it to the patient’s home. The company plans to one day work with multiple dispensaries to expand operations into every market where medical marijuana is legal. This company has received funds from Y Combination, an investment incubator that funds tech companies.
- Leafly. Leafly is a website that offers reviews of marijuana-related products. The company is owned by Privateer Holdings, a Seattle company.
- Tilray. Also owned by Privateer Holdings, Tilray is an agricultural company that legally grows marijuana and conducts research on cannabis in Canada. Privateer Holdings recently received a large investment from a venture capital firm, called Founders Fund, for Tilray, Leafly, and its other cannabis businesses.
- SpeedWeed. SpeedWeed is a small start-up that currently provides medical marijuana services in the Los Angeles area.
Despite the fact that there is ample opportunity in the marijuana industry because it is relatively new, there are some unique challenges to operating a company because of regulations and differences in laws . Many federal tax deductions are unavailable to marijuana companies because their industry is considered illegal at the federal level. There are also strict restrictions about how cannabis products and services can be marketed because of the nationwide prohibition of marijuana.
As legalization of recreational and medical cannabis continues to sweep through states, and more countries like Colombia and Canada fully legalize marijuana for medicinal use, cannabis start-ups are poised for success, provided that they are properly managed and marketed. Investors from Silicon Valley, Wall Street, and abroad are sure to continue to look for promising investment opportunities in the cannabis industry.