VCs have poured $2 billion into cannabis, but investors are still wary - Business Insider

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Venture funds have poured close to $2 billion into cannabis startups this year. But top investors are starting to get wary as headwinds mount.

, said he's been looking for cannabis startups to invest in but hasn't found many attractive deals lately."Valuations are still too high," Tusk said in a recent interview. He said investors are becoming more cautious after being burned by companies like Uber and WeWork

He said the challenges may be particularly acute for companies focused on CBD, because so many raised money after the US legalized hemp-derived CBD in December of last year."We're seeing a lot less CBD stuff," says Tusk. "The craze is certainly dying down. Lots of people who raised CBD seed rounds at its peak will struggle to raise a Series A.

"It's been a lot more challenging for MSOs to raise capital," says Lui. Lots of the capital that initially invested in those companies in the last quarter of 2018 and the first two quarters of this year was "short term focused" says Lui. After many of those companies went public and saw their share prices crater, "that capital is sitting on the sidelines," says Lui.

 

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