High Times at Chicago Booth

By Reid Tileston ‘15

In 2009 Eric Holder stated that the US Government has “bigger fish to fry” than to go after cannabis growers. In 2007 30% of adults support legalizing cannabis for personal use, in 2010 48% approved, and in 2013 53% approved. Cannabis for medical use is legal in 21 states in addition to the District of Columbia and recreational use is legal in 2 states. With all of that legalization there are countless business opportunities.

On November 4th, a group of students crammed into room 104A for a lunch-time panel on business opportunities in the cannabis space. The panel consisted of operators, investors, and legal experts. The event was put on by the Entrepreneurial and Venture Capital Group (EVC) and was spearheaded by co-chair and serial entrepreneur David Rabie.

Rabie describes the event as being part of a larger effort of, “bringing speakers and panelists for new industries” to Booth. As a measure of interest, the typical EVC lunch n learn has about 40 students, while the Cannabis event had around 80. In addition to those that attended, Rabie noted that, “about 15 people came up after and asked how the event went, the interest was overwhelming.” Rabie noted that the school was, “supportive of the event and helped to plan it.”

Panelists compared the opportunities in the cannabis industry to Prohibition, outlining that there are a plethora of opportunities outside of growing: ranging from security, to transportation, to banking. While a lot of industries are dominated by big players, the cannabis industry consists largely of small firms and is very fragmented.

ArcView co-founder Mark DeAngelo

ArcView co-founder Mark DeAngelo

If you have a cannabis idea and are looking for funding there are options. Seattle Based ArcView allows members pay a $3,500 membership fee in addition to a one time fee of between $1,500 to $3,000 for a 30-minute slot to pitch your idea to a group of  30 cannabis angel investors. ArcView co-founder Mark DeAngelo notes that, “initially we only heard ideas from entrepreneurs whose idea allowed them to not touch the drug but now a group of investors is eager to hear from state-licensed businesses that actually touch cannabis (though ArcView has made no official decision on the matter).” If they like your idea they will individually back you on the spot. Ideas that were pitched at their most recent summit included high-tech vaporizers, Halo (a product that makes it less intrusive to smoke cannabis in public), a high-tech growing lamp imported from Sweden, and a cannabis crowdfunding website. As ArcView CEO Tony Dayton states, “a geyser is going to go off, the question is which companies are going to be sitting on top of it when it does.” There are also two Cannabis investment funds Privateer Holdings (co-founded by a Yale MBA) along with MC Advisors.

While Chicago Booth does not yet offer a lab class on opportunities in the cannabis industry, Professor Brian Barry does offer an in-class debate on the cannabis industry as part of his Business, Politics, and Ethics class. One thing seems for certain, no matter where you land on the ethical or legal side of cannabis, cannabis business opportunities are ripe for the picking.

Reid Tileston is a second year at Chicago Booth