The era of Big Weed is upon us

Just the beginning.
Just the beginning.
Image: AP Photo/Ted S. Warren, File
We may earn a commission from links on this page.

Once upon a time, US cannabis culture—and the industry supporting it—was decidedly anti-corporate, the realm of outlaws. That was because most uses of cannabis were, in fact, outlawed. Today, as legalization spreads, the cannabis industry is attracting attention from deep-pocketed financiers and big corporations. And when it comes to big money flowing into the industry, 2018 was the year the dam broke.

In 2018, US venture capital investment in cannabis companies topped $900 million. As of March 8, investments were on track to double that in 2019. This week, Vertical Companies, a California-based cannabis firm, raised $58 million from investors. It set out to raise $20 million last year, but “upsized” its fundraising ambitions due to higher demand.

These venture capital investments are dwarfed by alcohol and tobacco firms buying into the cannabis business, making already big players even bigger. In 2018, the value of mergers and acquisitions in the cannabis industry topped $15 billion, more than a third of which came from players in the tobacco and alcohol industries.

Canopy Growth, which is listed on the New York Stock Exchange, was already Canada’s largest cannabis producer when Constellation Brands—which owns alcohol brands including Corona, Modelo, and Robert Mondavi wines—poured $4 billion into its coffers last year. (Just yesterday Constellation Bill Newlands CEO told CNBC he expected Canopy to generate $1 billion in revenue by the end of the fiscal year.)  Altria, the maker of Marlboro cigarettes once known as Philip Morris, paid $1.8 billion for a 45% stake in Cronos, another Canadian mega-producer, at the end of last year.

Big pharma isn’t far behind. While some analysts predict pharmaceutical companies will wait for federal legalization before they start making direct investments in cannabis companies, strategic partnerships are already underway. At the end of 2018, Canadian medical cannabis giant Tilray announced an agreement with Swiss pharmaceutical company Novartis to facilitate product development, co-branded products, and pharmacist and physician education.

Looking for more in-depth coverage of cannabis? Sign up for a free trial of Quartz membership, and read our premium field guide on the multibillion-dollar cannabis wave.