Daniel Yazbeck stepped up to the podium in front of about 140 investors in a Las Vegas conference room with 15 minutes to persuade them to bankroll a hand-held testing device that helps dagga users evaluate cannabis.
Yazbeck, a lead investor in the product called MyDx, part of La Jolla, California-based CDx, told the group he was looking for $1.25 million (R13.8m) in exchange for a 20 percent stake in the analyser company.
He was the first of 12 entrepreneurs invited to pitch at a conference organised by the ArcView Group, a San Francisco-based firm of angel investors.
“It’s a tool that will not only educate but empower people with healthier lives by knowing what’s in everything they eat, drink and inhale,” Yazbeck, 36, said on Friday, before showing a video on the tester, which also will be able to detect pesticides in food and contaminants in water.
The meeting coincides with the start of legal cannabis sales in Colorado, where retail shops opened on January 1 to long queues of consumers. Investor interest has surged since voters in the US states of Colorado and Washington became the first to legalise recreational dagga use in 2012. Stores are expected to open in Washington state later this year.
“Welcome to the golden age of cannabis investing,” Steve DeAngelo, the ArcView president, said at the start of the meeting.
“There will never, ever be another time when the deals for investors will be as good as they will be over the course of the next couple of years,” said DeAngelo, a co-founder of Harborside Health Center, a medical-marijuana dispensary in Oakland and San Jose, California.
“So be cautious, do your due diligence, be deliberate, be wise. But have your cheque books ready. The time is now.”
Jon Cooper and Dooma Wendschuh, the co-founders of Denver-based Ebbu, took to the stage to pitch cannabis products from pre-rolled joints to refills for e-cigarettes, all labelled to show the high they produce, ranging from “chill” and “giggle” to “bliss” and “energy”.
“What happens when you walk into a dispensary?” Cooper asked the crowd. “You see rows and rows of glass jars and each of them contains a different strain.
“With upwards of 500 different strains, you can see how this is really confusing for the cannabis consumer. How do you find a strain that’s right for you?” he said.
Wendschuh said of their labelling system: “No more half-hour conversations with the budtender. It’s simple, and it’s going to change the world.”
Investors at the meeting included Joby Pritzker, whose family started Hyatt Hotels, and who declined to be interviewed.
Tom Bollich, a founding employee of Zynga, the San Francisco-based maker of FarmVille, said investing in the cannabis business felt similar to the mobile applications industry.
“It’s like the wild, wild West,” said Bollich, the chief executive officer of Hydro Innovations, a Boulder, Colorado-based company that makes climate-control systems for dagga growers.
“Right now, it’s a gold rush and we’re trying to sell shovels,” Bollich said outside the conference room, between brief interviews that resembled speed dating. Investors and entrepreneurs lined up across from each other with a few minutes to talk before moving to the next person.
Twenty states, including California and Massachusetts, allow the medical use of cannabis. While federal law still classifies the drug as an illegal substance, the US Justice Department said in August that it would not challenge the legalisation laws in Washington and Colorado, provided the states prevented out-of-state distribution, access to minors and drugged driving, among other things.
President Barack Obama said he did not think cannabis was “more dangerous than alcohol”, in an interview with the New Yorker published on January 19. Noting that he had smoked the drug during his youth, he also said he viewed it now as a “bad habit and a vice”, and “not something I encourage”.
Leaster Gibson, 38, an investor from Springfield, Missouri, said he was interested in backing a couple of companies that had made pitches, while declining to name them.
“Marijuana is the best growth industry probably in the next five to 10 years,” Gibson said in an interview in the conference hall’s courtyard, where the smell of dagga filled the air.
“I think there’s a tremendous amount of money to be made.” – Bloomberg