Assessing the Marijuana Investment Climate: Q&A With First Capital Venture’s Erin Turoff

By John Schroyer

Erin Turoff packed her belongings and moved to Denver from New York City earlier this year for one reason: to get into marijuana investing.

The seasoned asset management professional – who previously rubbed elbows with institutional investors and hedge fund managers – is convinced cannabis is the investment world’s next big thing. 

And she’s not going to miss the boat.

After moving to Colorado, Turoff landed a position as the chief operating officer and managing director of First Capital Ventures, a Denver-based investment fund that aims to pump tens of millions into the legal marijuana industry.

Marijuana Business Daily caught up with her recently to get her thoughts on the industry and where she sees the best investment opportunities.

Why did you decide to move to Colorado to enter cannabis investing instead of Nevada, California or another state?

Colorado is at the forefront of the industry. They’re the leader in setting the pace for other states, and I wanted to get in on the ground floor as early as possible. That’s where you make the most return on your investment.

I think a year from now it’s going to be late for a lot of investors to get into this space. And I think right now is when you want to put your money into cannabis, just given how the laws are changing and how everything is rolling out across the nation.

Do you have any big picture goals with First Capital that you can share?

Our goal is (to raise) $50 million. And for a first-time fund I think that’s a healthy number. We’re looking to get that completed by the end of the year.

We signed our first term sheet in April with an edibles and chocolate company called Coda Signature, which is based in Trinidad, Colorado. We’re trying to help them get off the ground and get into as many dispensaries as possible – do a national rollout and kind of put together a strategic plan for getting into other states eventually.

Is First Capital going to be investing in other plant-touching companies?

We’re primarily investing in non-plant-touching companies, but definitely ancillary products as well. We are doing a lot of stuff right now with real estate, and then you’ve got industrial hemp to round it out.

We will definitely go international. But right now we’re focused on anything in the U.S., with a focus on states where it’s already been legalized. Israel is doing a lot of cool stuff with cannabis, so we’d love to get into that market at some point. We have a heavy focus on California, Colorado, New Mexico. We’re a lot more comfortable with the western region, but we’re definitely going all over the place.

Do you expect more institutional investors to warm to the cannabis industry in coming years?

Absolutely. I think the institutional investors will be a little bit slower to move, which is always the case with any type of investment product, especially the new ones. I would say the ones I’d consider the thought leaders in the industry are getting in now. I think with the institutional investors you really need a conversation one-on-one, maybe a phone call, just to ask the question if they’re open to cannabis.

Will there be more capital available for growth and startups in the future?

I think there will be a lot more capital available as time goes on. I think it’s probably difficult to find the funds that are investing in these types of businesses right now. But my hope is that more cannabis-only funds start popping up as people get more comfortable with the idea of it. I think you’ll start to see a ton of portfolio companies hit the market in all different states all over the country.

So I think that’s just ramping up. It’s probably less than 5% mature right now. It’s got a really long way to go.

What have you learned in just the past few weeks since you started? What did you mean by there being more interest than you expected?

Given my background, I haven’t had any discussions with investors about cannabis up until this point.

But over the last few weeks, just talking to investors and my personal network, I’m shocked at how positive the reception has been and how interesting cannabis is to investors and people in general right now.

This is an interesting area of private equity and venture capital at the moment, and there’s a learning curve, unfortunately. So part of our challenge is educating people about the industry itself, giving predictions that are thoughtful about how the states are going to roll out and how the industry is going to shape out over time.

Are there any particular niches in the industry that you see as particularly good or bad investments?

I’d say we’re definitely technology-oriented, so we definitely have a preference and look for companies that have some sort of angle of technology within cannabis.

This interview has been edited for length and clarity.

John Schroyer can be reached at [email protected]

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