Snoop Dogg's Casa Verde Capital closes on $100 million as the cannabis industry bounces back
Casa Verde Capital, the mutual fund co-founded by cannabis connoisseur Snoop Dogg (also known as Calvin Broadus), has closed $ 100 million on its second mutual fund, according to the SEC.
The fund, whose managing director Karan Wadhera refused to comment on the article, raised more money than the cannabis product market seems ready for another phase of expansion.
"What happened to the public perception of the cannabis industry is not too dissimilar to the dot-com bubble in the late 1990s, when there was a lot of hype - a lot of it being driven by public corporations - and a lot of speculative trading and reviews that wasn't in reality really justified. [We're talking about] predictions for several years into the future and insane sales multipliers beyond that, "said Wadhera of the last bust when speaking to TechCrunch in July. "Things got really frothy right now, and it finally burst, and last April or May was kind of the high point of that moment. It was when things weakened. And it was these names, especially the public names, that were hit particularly hard. "
The industry has since returned.
"Cannabis sitting here today, more than four months after COVID, has really proven to be a non-cyclical industry. Cannabis was viewed as an essential business across the US. We had record sales in March, April and May and the trend has carried on, "said Wadhera in July. "And now that we are in an environment where governments will be looking for additional sources of tax revenue, the potential urgency to legalize cannabis will be, which will be hugely positive for the industry."
There is no indication of the goal for the new venture capital fund, but with the new fundraising, Casa Verde has more than doubled the size of its original investment vehicle.
Cannabis VC Karan Wadhera on the reasons the industry, which had a success last year, is now burning quietly
Since Broadus, Wadhera and a third partner, as well as Cashmere Agency and Stampede Management founder Ted Chung, launched their debut fund in 2018, weed companies have seen a rollercoaster business cycle of boom and bust.
Despite these market volatility, Casa Verde has managed to build a portfolio worth at least $ 200 million, according to people with knowledge of the company. This money was raised through several special purpose vehicles and other donation mechanisms along with the flagship fund.
The overall market for cannabis and cannabinoid derivatives is expected to reach $ 34 billion by 2025, according to an analyst report by TechCrunch by investment bank Cowen.
With Arizona, Montana, New Jersey, and South Dakota all enacting measures to legalize adult cannabis in their states, the investment bank forecast roughly 30 percent growth from its overall addressable market estimates.
For its part, Casa Verde has always taken a comprehensive look at the potentially addressable market that cannabis and its chemical compounds could conquer.
Nowhere is that seen like the company's recent investment in sleep company Proper.
Snoop Dogg's Casa Verde enters the bedroom and supports Proper from NY
"[Cannabis] is also an input and its use case will go beyond people's stigmatic attitudes towards cannabis," said Wadhera. "At its core, [Proper] is a company helping us fight this sleep epidemic. We believe that CBD and cannabis in general can play a huge role in addressing this in ways that traditional products couldn't."
And what applies to sleep also applies to a number of other uses, Wadhera has said in the past.
Casa Verde has already invested heavily in the pure possibilities of cannabis. Investments include delivery, supply chain logistics, brands and retail.
But the health benefits cannabinoids could have for all kinds of diseases open up a much wider market - as does the broader consumer opportunities, should Congress comply with the wishes of more than 60 percent of American voters and legalize legal cannabis use at the national level.
And, as Wadhera told us in July, a Biden administration offers a potentially much more positive regulatory environment for the industry than the previous Trump administration.
"I think Biden will be very helpful. He has set out a lot of the things he wants, and [while] he's not getting it to full legalization, he certainly is for full decriminalization, [which means that states are the have full authority over what happens to their businesses, including rescheduling cannabis from the current Schedule 1 level, "Wadhera had said. "All of this is going to be incredibly helpful, and will bring many more players who are comfortable investing in the space and possibly acquiring some of these companies as well."
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