Investors Look to Tech Firms, Not Growers

Cannabis-oriented tech companies are having an easy time raising capital -- what does this say about the industry?

Business Insider reports that LeafLink, a tech firm specializing in providing a transaction platform for the cannabis industry, had incredible success in getting capital to expand into California, raising $10 million. While this is likely a good sign for those who have been following LeafLink since it first began operating in markets like Colorado, it also raises interesting questions about the state of the industry.

Many investors are desperate to start spending money in the burgeoning cannabis industry, but are shying away from companies that directly interact with cannabis itself -- so-called "plant-touching" firms. This is due to marijuana being presently federally illegal, which places such investments into a legal grey area. Investors are instead seeming more confident to invest in those companies that offer services adjacent to the industry, rather than in the industry itself. As it happens, most of those are in tech, like LeafLink.

This predicament seems to underscore the way that the odd regulatory state of marijuana has begun to distort the market. It also shows that investors may want to pay particular attention to companies emerging in adjacent industries, like tech and administration, as those firms may have an easier time acquiring the necessary conditions for growth.