Cannabis Venture Capital In 2025: Here’s What Unfolding

While the intense bullishness of earlier years continued to moderate in 2024, the cannabis investment market showed signs of stabilization and strategic recalibration. Overall investment levels likely saw a decrease compared to the peak of 2021, reflecting a more cautious approach from venture capitalists and other funding sources. Investors became increasingly selective, prioritizing companies with clear paths to profitability, strong management teams, and demonstrable traction in key markets.

Mega-deals (over $100 million) likely continued to be less frequent as investors exercised greater due diligence and favored less capital-intensive opportunities. Smaller to mid-sized deals, particularly in the early stages (seed and Series A), may have maintained more consistent activity, as investors sought promising startups with innovative technologies or strong market positions.

Investor sentiment was likely influenced by ongoing regulatory uncertainties at the federal level in the US, as well as evolving state-level regulations and market dynamics. The performance of the broader economy and the risk appetite of investors across all sectors also played a role. While the long-term growth potential of the cannabis market remained attractive, the immediate investment climate likely favored more pragmatic and less speculative ventures.

Of course, venture capital is just one way to raise money in cannabis. There are several other options, each with its own pros and cons. 

Crowdfunding 

Crowdfunding takes investment out of the hands of venture capitalists and puts it into the hands of the public. With crowdfunding, retail investors or people from the general public can invest in companies for as little as $100 on digital platforms. 

This is a great option for companies with a passionate consumer base and compelling narrative. It also opens up a wealth of investment options for people who wouldn’t have otherwise had access to early-stage cannabis companies. It’s important to note that the companies with the most success with crowdfunding emphasize marketing and spreading the message.   

Angel Investors

An angel investor is an accredited private investor. By the Securities and Exchange Commission’s (SECs) definition, these individuals must have a net worth of at least $1 million in assets or have earned $200,000 per year for at least two years. They typically invest between $25,000 and $500,000 in “high-risk” investments with potentially significant future gains. 

Angel investors have become increasingly popular over the past two decades and present a more approachable alternative than venture capital since the requirements for being an angel investor are relatively low.  

Debt 

While taking on debt may not be the first choice for a business owner, it is a historically successful path forward for business growth. But debt financing is not a good choice for all businesses, especially those without hard assets like real estate and a history of generating profit. Rising interest rates have made lenders wary, making debt financing highly costly for businesses. 

Additionally, most lending institutions have strict EBITDA (earnings before interest, taxes, depreciation, and amortization) to debt ratios, making it challenging for small businesses to qualify.

Each of the following cannabis or marijuana firms has been particularly active in the US cannabis sector in recent years (2022–2025), either by exclusively backing cannabis companies or by making significant cannabis-related investments.

• Casa Verde Capital: A cannabis-exclusive VC firm focusing on ancillary companies within the cannabis industry, investing from seed to growth stages.
• Entourage Effect Capital: A cannabis-exclusive fund (formerly Cresco Capital Partners) investing in early-stage to growth ventures and private equity.
• Poseidon Asset Management: An early dedicated cannabis fund with a multi-stage investment approach, from seed through later stages, including public deals.
• Merida Capital Holdings: A cannabis-exclusive private equity firm focused on sector-specific investments in growth-stage and late-stage, post-revenue companies.
• Gotham Green Partners (GGP): A cannabis-exclusive investor with a PE/VC hybrid model, focusing on late-stage growth and mezzanine financing.
• Arcadian Capital: A cannabis-exclusive VC firm with a holistic industry approach, investing in seed and Series A, targeting early-stage tech and ancillary startups.
• JW Asset Management: A generalist fund that has turned cannabis-focused, originating in pharma and investing in late-stage venture and public markets (growth equity).
• Tuatara Capital: A cannabis-exclusive VC/PE firm with an institutional focus, investing in growth-stage and pre-IPO companies with hands-on strategic support.
• Salveo Capital: A cannabis-exclusive VC firm with a focus on ancillary services, investing in early- to growth-stage and “plant-light” companies.
• Subversive Capital: A generalist VC with notable cannabis investments, employing a SPAC/ETF strategy and focusing on late-stage and strategic deals.

With venture capital in decline, every opportunity you get to pitch your business is essential. Here are a few common challenges that canna-businesses may encounter when searching for cannabis venture capital.  

High-Interest Rates

Interest rates are rising across every industry, and cannabis is no exception. Potential investors’ term sheets show incredibly high-interest rates, making both sides of a deal more cautious. The price of lending is already higher in cannabis than in other industries, and inflation of this rate is making everyone tread carefully.

Banking 

While there was initial excitement in 2022 over the potential of the SAFE Act passing, that has not come to pass yet in 2025, and investors are still wary of gambling with their money. The failing SAFE Act creates complications for cannabis. With the federal prohibition of cannabis, banking can still feel like a minefield for new companies.  

The Rise of Psychedelics 

Psychedelics are developing quickly, sometimes seemingly more attractive than cannabis. Psychedelics is an industry quickly on the rise, and many investors view it as similar to, but in competition with cannabis. While both forms of plant medicine can benefit people and work well together, cannabis and psychedelics are often compared like siblings in boardrooms and budget sheets. 

Since some psychedelics like ketamine are not classified as schedule one substances, investors can view them as a less-risky investment with equally large growth potential.  

The D&O Insurance Market 

The D&O insurance market for cannabis in 2024 continued the softening trend seen in previous years, marked by abundant capacity and competitive pricing. While many companies experienced flat or decreased renewal premiums, insurers showed increased scrutiny towards risk selection. 

Factors like evolving regulations around AI and ESG, along with economic uncertainty, raised concerns, potentially signaling a shift in the market as insurers reassessed risk portfolios. Despite the overall soft market, companies with challenging risk profiles or those in volatile sectors likely did not see the same level of premium relief. As a result, since many investors require portfolio companies to have D&O coverage to protect them from market scrutiny, cannabis companies must factor in D&O coverage to their budget.  

It’s not an easy time to be in cannabis, particularly not in cannabis capital. Cautious optimism and renewed perseverance are called for if your company is to weather this storm. It also helps to have the right team in your corner because no one makes it alone.

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by emailing [email protected] or calling 646-854-1093 for a customized letter of commitment or learning more about your cannabis insurance options.