A flowering cannabis plant is seen through a magnifying glass at a cultivation center in Bridgeview. Photo: John J. Kim/Chicago Tribune/Tribune News Service via Getty Images
After a long court battle over marijuana licensing was resolved last year, Chicago dispensaries and craft growers have finally found footing to start their businesses.
One problem: Seed money is drying up.
Why it matters: Stemming from a downturn in the economy and the delayed rollout of cannabis licenses, weed investors are pulling back on funding local entrepreneurs.
“You have hundreds of individuals who spent tens of thousands of dollars on retail licenses that they thought would take three months to obtain, but instead took two and a half years,” Brad Spirrison, CEO of cannabis industry insights firm Grown In, tells Axios.
“Now that they got the licenses, cannabis stocks are in a depression, and nobody has any money.”
Context: Weed stocks ended 2022 in decline, mainly due to Congress’ inaction to pass the SAFE Banking Act, which would have legalized banks’ providing financial services to the marijuana industry.
Institutional investors that are federally chartered cannot invest or trade in cannabis businesses because marijuana is still illegal at the federal level.
Zoom in: That’s where the new 1871 Cannabis Innovation Lab comes in. The Chicago startup incubator launched the lab this week and is looking to connect license holders and craft growers with investors outside the cannabis space, namely in the tech sector.
How it works: The lab is a nonprofit initiative modeled after tech accelerators like Techstars.
19 licensed companies will participate in a 12-week accelerator program, where they’re paired with bigger companies, investors and experts to network, mentor and share resources.
By the numbers: In 2022, Illinois’ adult-use marijuana sales reached $1.5 billion, the highest number ever recorded.
Investment in Chicago’s tech sector, meanwhile, reached a record high of over $10 billion.
Yes, but: Chicago’s tech scene has started 2023 with cutbacks and layoffs.
What they’re saying: 1871 CEO Betsy Ziegler doesn’t think the cuts will deter investment here.
“The heartbeat of the massively expanding cannabis industry is right here” in Chicago, Ziegler tells Axios. “As more and more businesses enter this space, technology advancements will be required to unlock new solutions.”