A $200M day: Two investors reveal big plans to fund marijuana businesses
By Bart Schaneman
A California retail estate investment firm and a wealthy Florida medical marijuana advocate separately pledged Tuesday to pump $100 million each into cannabis businesses, marking a notable new chapter in the MJ industry.
The combined $200 million is among the largest amounts of planned cannabis investments disclosed in a single day.
Moreover, the investment plans were unveiled at opposite ends of the country,signaling growing investor interest in marijuana businesses from coast to coast.
In California, a new MJ subsidiary ofan established Beverly Hills real estate investment firm announced plans to spend $100 million on Californias medical and recreational marijuana industries over the next year.
StarGreen Capital, a unit of StarPoint Properties, said itplans to pump moneyinto a range of marijuana companies, focusing initially on cultivators, manufacturers and retailers.
Also on Tuesday, Florida attorney and medical marijuana advocate John Morgan told the Miami Herald he plans to invest $100 million in the right opportunities, adding that hes also interested in acquiring a stake in a licensed MMJ business in his home state.
In an interview with
Troy Dayton, CEOof investment and market research firm the Arcview Group, predicted additional significant investment dollars will flow into the cannabis industry after Tuesdays announcements.
Theres still a long way to go, Dayton said. Weve just seen the beginning.
Diversifying into cannabis
Paul Daneshrad, the CEO of both StarGreen Capital and parent StarPoint, said it is time to move beyond traditional commercial and residential real estate deals.
Were just seeing a much greater, and greener, opportunity in this space and we feel like this is a much better place to invest capital, he said of cannabis.
Parent StarPoint invests in commercial and multi-family properties in California, Colorado, Florida, Texas and Washington state.On its website, StarPoint said its current real estate portfolio totals $800 million.
Daneshrad said StarGreen Capital has lined up the $100 million. The company already has invested $15 million in marijuana businesses.
The firm also is in late-stage negotiations with two California marijuana businesses that Daneshrad declined to identify because of confidentiality agreements.
Looking beyond California
While StarGreen Capitals initial focus will be California, the company is prepared to look nationally at some point.
In terms of individual deals, Daneshrad said StarGreen Capitals sweet spot will be in the $5 million-$20 million range. If the deal is larger, the companywould consider it but would probably team with partners.
The company hopes to make about 10-15 deals. We do want to diversify it, Daneshrad said.
He said StarGreen Capital already has lined up strategic partners, including two venture capital firms and two cannabis funds.
According to Daneshrad, StarGreen Capital for now will focus on professional entrepreneurs who have a branded strategy.
The company also likes anything with a real estate component, Daneshrad said for example, a dispensary that wants to cultivate and owns a piece of real estate. Another ripe candidate would be a grow operation inColorado that wants to move into the California market and needs real estate,capital and a partner.
The best partner for us is someone who is somewhat sophisticated and professional and wants a silent and professional partner, Daneshrad said. What I would call friendly capital.
StarGreen Capital is interested in both new and established companies.
The younger, newer entrepreneurs who have just started and are having a harder time to access capital are good partners for us because we want to just be a capital source and thats going to be a lower entry point for us. Meaning its going to be an earlier stage but cheaper, Daneshrad said.
The more established companies are going to give us a quicker entry into the market and stronger penetration, but its going to be more expensive.
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