Venture investors are seeing green in cannabis tech.
Cannabis ecommerce startup Dutchie closed a $35 million funding round, the company said on Tuesday. The round included mainstream funds, like Josh Kushner’s Thrive Capital and Kevin Durant’s Thirty Five Ventures, as well as Casa Verde Capital, a cannabis-focused fund, and Howard Schultz, the billionaire Starbucks founder.
The Bend, Oregon-based company uses software to connect cannabis consumers — who can order from the comfort of their own homes — to local dispensaries in their area.
CEO Ross Lipson, one half of the pair of brothers that runs the startup, previously founded a food delivery startup he sold to Just Eat in 2012. Lipson said that while Dutchie has some similarities to his previous ecommerce business, working in cannabis is a totally different ballgame.
“The food space has been around for a long time,” Lipson told Business Insider. “There are many players that have defined it and we’re just kind of adding on. We actually have this unique opportunity being in cannabis with such a brand new industry, and it’s evolving so fast that we get to define it.”
Mainstream VCs are warming up to the cannabis industry
Thrive Capital, for its part, is one of the few mainstream venture funds that has invested in the cannabis tech space, having invested in LeafLink last year.
“I think VCs are warming up to the cannabis space,” Lipson said. “Especially on the tech side. But it’s moving slow.”
Most mainstream funds are barred from investing in cannabis because their investors — or limited partners — have specific clauses in their contracts that prevent VCs from investing in industries like cannabis, or gambling.
But as cannabis becomes more mainstream — spurred by the “essential business” designation many dispensaries received at the height of the lockdowns associated with the pandemic — Lipson says that venture funds are cautiously opening their doors to the sector as cannabis use becomes more widespread.
“The needle is moving in the right direction,” Lipson said.