Multi-Million Dollar Cannabis Venture Capital Fund in Works, Plans to Target Ancillary Marijuana Startups

Just Released! Get realistic market forecasts, state-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.

A California venture capital firm led by noted MMJ pioneer Justin Hartfield – who co-founded –  has launched a new investment fund that aims to pump millions of dollars into cannabis companies, acquire ancillary businesses and help guide fledgling marijuana firms.

Newport Beach, Calif.-based Ghost Group hopes to raise between $10 million and $25 million for the fund – called Emerald Ocean Capital – by the end of the year, Hartfield said. Under that timeline, the fund could begin making investments in early 2014.

“We are just now in the beginning stages of raising money and don’t have an exact amount in mind – we just kind of want to launch the fund and see what the response is,” said Hartfield, who started the fund with founder Doug Francis. “The response so far has been great, and we are already getting a lot of inquiries.”

In fact, Hartfield said his group has received 150-200 emails from potential investors and others interested in the fund over the past day alone. If the interest actually translates into investments, the fund could raise money more quickly than envisioned and begin funding companies later this year.

Emerald Ocean Capital will focus primarily on the recreational market, seeking out companies that are developing consumer-facing products and services – with a particular emphasis on technology. Other areas of interest include everything from real estate and marketing services to cultivation equipment. The fund will also target companies that cater to other businesses in the space, such as products to marijuana retail shops, cannabis grow operations and edibles companies.

Aside from making investments, the fund will consider acquiring firms and might even start some of its own companies. It will also offer guidance and advice to startup firms it works with (similar to a business incubator), providing office space at the office in the Denver area.

“Unlike a traditional VC company, we’re in the same industry that we’re investing in,” Hartfield said. “We want these companies to be able to utilize our expertise and utilize the WeedMaps brand for a licensing fee. We want to help these young entrepreneurs by partnering with them so we can create products together.”

The WeedMaps brand is well-known in the cannabis industry, often regarded as the go-to source for dispensary listings, user-generated reviews and coupons/deals.

The new VC fund hasn’t technically raise any money yet, although its portfolio includes – which WeedMaps currently owns – as well as an upstart company called Cannabinoid Science Systems that holds various cannabis-related patents.

Even if Hartfield and Francis manage to raise $25 million, the fund will be considered tiny in the venture capital world – where single investments often run into the tens of millions of dollars. But it would be fairly substantial for the cannabis industry, which suffers from a dearth of funding dollars.

In terms of an exit strategy, Hartfield said the fund will earn big returns by eventually selling the companies it invests in or taking them public.