Oakland Conference Focuses On Budding Relationship Between Cannabis And Bay Area Tech

This week’s Elevate conference had all the makings of a typical startup summit: Incubator founders moderated discussions on how to raise capital; entrepreneurs sat on panels about measuring success; and expo booths were filled with eager companies showing off their goods.

But unlike your usual conference, panelists at Elevate talked about “no intoxication policies,” the outdoor expo hall had a cordoned off area for attendees to “medicate” — and the legality of investing in the very industry everyone gathered to discuss is still a gray area.

That’s because Elevate’s singular focus was marijuana, and, more importantly, its budding relationship with Silicon Valley.

Held at the Oakland Museum of California — where the current exhibit, “Altered State: Marijuana in California,” was ironically on point — Elevate brought together 500 hundred attendees made up of investors with cash burning holes in their pockets and entrepreneurs looking to get a piece of it.

“There’s a Chinese proverb that says, ‘May you live in interesting times,'” said Steve Berg, adviser at ArcView Group, a leading cannabis investment and research fund based in San Francisco. “And the good news is, we do.”

Indeed, the cannabis industry is on the brink of explosion and everyone — from longtime growers to tech bigwigs — is trying to figure out what to do with it.

As of now, cannabis is a $7 billion national industry, expected to grow to $22.8 billion by 2020, according to a report from ArcView. But this growth hinges on the outcome of several legalization measures on state ballots in November, including Prop. 64 in California, which would legalize adult recreational use and effectively bust the industry wide open.

Despite the stigmatization and blurry legality of the industry, however, almost 100 investment deals totaling more than $200 million were made across the U.S. in 2015 alone. That includes a recent partnership between Microsoft and Los Angeles-based startup Kind to create software that tracks marijuana plants from seed to sale, and Peter Thiel’s recent investment in Leafly.com, the “Yelp of weed.”

And the deals are growing.

“We have seen a proliferation of businesses and we have seen check sizes go up, but it’s not exploding yet,” said Nico Richardson, principal at Privateer Holdings, a Seattle-based private equities firm focused on the cannabis industry. “There’s still a cap that exists and it’s really driven by the patchwork of regulations in different states and the inability of businesses to scale market to market.”

Investors are still hesitant to “touch the plant,” or deal with businesses that are cultivating the product itself, but are looking to ancillary companies like dispensaries, delivery services, light and fertilizer manufacturers and those solving less obvious problems in the industry, like payroll, point-of- sale systems and inventory management.

With this in mind, entrepreneurs are scrambling to fill these gaps and get a foot in the door. Accordingly, an ecosystem is sprouting up to support them: Elevate also marked the graduation of the first class of startups to come out of Gateway, an Oakland-based cannabis startup incubator founded by longtime Silicon Valley investors Carter Laren and Ben Larson. Boulder-based incubator Canopy was also a partner in the event.

But the focal point of the summit, and every event surrounding the industry, remained on legality.

“To really blow this industry open, it needs to seem less exotic and less risky,” Berg said.

To do that, pioneering businesses in this space “need to implement best practices and standards that are higher than any other industry because of the unfair lies and stigmas propagated against us,” according to Leslie Bocskor, founder and president of Electrum Partners, an advisory and consulting company specializing in the legal cannabis industry.

For a conference focused on a substance federally classified as a drug with a high potential for abuse and no currently accepted medical use, Elevate attendees showed little sign of being anything other than young entrepreneurs with green stars in their eyes. This professionalism coupled with the impending legal status of cannabis is set to change the industry forever.

“This year will be the tipping point that we look back on and say, ‘That was the moment in history when everything changed,'” Bocskor said.

Source: San Francisco Business Times, Tessa Love
Photo: Held at the Oakland Museum of California, Elevate brought together 500 hundred attendees from the cannabis industry made up of investors with cash burning holes in their pockets and entrepreneurs looking to get a piece of it. Left to right: Ben Larson, co-founder of Gateway; Nico Richardson, principal at Privateer; Steve Berg, partner at ArcView Group; and Jun Hong Heng, managing partner at Crescent Cove.