California: Silicon Valley doesn’t like to talk about its investment in marijuana companies

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Silicon Valley is down on weed. Venture capitalist have mostly watched from the sidelines as the cannabis industry has grown into a multi-billion dollar business.

This isn’t entirely by choice. Venture capitalists themselves love massive new markets with few dominant competitors (recall search engines, mobile apps, and social networks).

But most venture capital firms have been anxious about cannabis. Many operate under what are known as “vice clauses,” restrictions imposed by backers, usually large institutions such as pension funds, that prevent them from investing in certain sectors such as firearms, pornography, or drugs.

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Legal questions remain unresolved about how the US federal government will treat marijuana companies despite legalization under a growing number of state laws.

A stigma persists as well: many of who those who have invested in the industry have been reluctant to even disclose that fact.

But that hasn’t fully stopped investment. Since 2012, more that $967 million has been put into 272 companies, according to data compiled by the investment research firm PitchBook.

However, none of the Valley’s biggest venture capitalists have invested heavily in the cannabis industry, which is expected to hit $50 billion in value by 2026. 

Family offices, private equity firms, and individual angel investors have stepped into that financing void. The most active are relative newcomers like the hedge fundPoseidon and the cannabis-only venture firm Phyto Partners.

Here are the top cannabis-industry investors ranked by number of deals, according to PitchBook:

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