Silicon Valley doesn’t like to talk about its investment in marijuana companies

Silicon Valley is down on weed. Venture firms have mostly watched from the sidelines as the cannabis industry has grown into a multi-billion dollar business.

This isn’t entirely by choice. Venture capitalists themselves love massive new markets with few dominant competitors (recall search engines, mobile apps, and social networks). But most firms have been anxious about cannabis. Many operate under what are known as “vice clauses,” restrictions imposed by backers, usually large institutions such as pension funds, that prevent them from investing in certain sectors such as firearms, pornography, or drugs. Legal questions remain unresolved about how the US federal government will treat marijuana companies despite legalization in a growing number of states. A stigma persists as well: many of who those who have invested in the industry have been reluctant to even disclose that fact.

But that hasn’t fully stopped investment. Since 2012, more that $967 million has been put into 272 companies, according to data compiled by the investment research firm PitchBook.

However, none of the Valley’s biggest venture capitalists have invested heavily in the cannabis industry, which is expected to hit $50 billion in value by 2026. Family offices, private equity firms, and individual angel investors have stepped into that financing void. The most active are relative newcomers like the hedge fund Poseidon and the cannabis-only venture firm Phyto Partners.

Here are the top cannabis-industry investors ranked by number of deals, according to PitchBook:

Investor # of deals
Poseidon Asset Management 28*
Phyto Partners 12*
ArcView Investor Network 8
Individual Investor 6
Casa Verde Capital 5
Hypur Ventures 5
Anthos Ventures 4
Slow Ventures 4
Salveo Capital 3
Tuatara Capital 3
Fresh VC 3
Lerer Hippeau Ventures 3
Intuitive Private Equity 3

*Confirmed by the firm

That said, several traditional corporate giants are happy to make money facilitating businesses that grow or sell marijuana, and in some cases, even investing directly into it.

Microsoft, for example, announced a partnership with a start-up to develop compliance software to help governments track marijuana from “seed to sale” (paywall) in 2016. New York venture fund Lerer Hippeau is backing Leafly, the cannabis e-commerce search site, that gives it deep insights into products popular in a growing cannabis market. Last year, the beer company behind Corona and Modelo invested $191 million to purchase a 10% stake in the Canadian weed startup Canopy Growth (Canada is set to legalize recreational marijuana late this year).

The Seattle firm Privateer Holdings, with assets valued at $490 million by PitchBook, is buying critical elements of the supply chain for growing, processing, and selling cannabis. Its major public investments include Leafly; Tilray a manufacturer and exporter of medical marijuana; and cannabis cultivation company, Marley Natural. Privateer has taken $200 million in investment including the some of first major Silicon Valley venture capital from PayPal co-founder Peter Thiel’s Founders Fund.

And there’s far more going on behind the scenes. While venture firms in Silicon Valley may not be willing or able to invest, the firms’ investors are free to use their own money. Many have. “A lot of Silicon Valley VCs have invested alongside us,” says Emily Paxhia, managing director of Poseidon. But, Paxhia adds, those deals are confidential.

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