A venture capital investment vehicle owned by the state of Connecticut has invested $1.25 million in the marijuana edibles company 1906.
Connecticut Innovations and 1906, which relocated to Connecticut from Colorado, said it is the first time a state has invested directly in a cannabis business rather than through a pension fund.
Connecticut Innovations bills itself as the state’s “strategic venture capital arm and the leading source of financing” for growing companies in Connecticut.
State-owned investment vehicles such as Connecticut Innovations or pension funds generally stay away from cannabis, given that marijuana remains illegal under federal law.
So why did the VC firm believe now was a safe time to make a cannabis investment?
“We view this as an emerging area for investment – and one we’re happy to explore. As with any of our investments, there is calculated risk but we are accustomed to assessing risk and investing in companies that can deliver returns and create jobs in Connecticut,” Lauren Carmody, vice president of marketing and communications at Connecticut Innovations, wrote in an email to MJBizDaily.
Connecticut Innovations, which has invested in a variety of mainstream businesses including biotech and software firms, could make more investments in the cannabis industry, according to Carmody.
“1906 is just the first investment in the industry. We are just starting to explore the cannabis industry, and we are actively looking at others now,” she noted.
In an email to MJBizDaily, 1906 CEO Peter Barsoom said the Northeast market is increasingly important for the company, as more states there legalize recreational marijuana.
He added that “it makes sense that we shift our HQ to where we see the future.”
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In a separate statement, Barsoom said, “CI’s investment in 1906 is a major milestone for the cannabis industry. Institutional investors don’t need to wait on sidelines for changes to federal laws before they participate in the cannabis market.”
Two well-known cannabis investment firms also joined this funding round: Arcview and Merida.
Omar Sacirbey can be reached at firstname.lastname@example.org