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VCs have poured close to $1.6 billion into the cannabis industry startups as of July, according to data from PitchBook.
That's up from just $16 million in 2013, as Colorado became the first state to open its doors to the commercial cannabis industry.
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Venture capital firms are seeing green in cannabis startups in more ways than one.
VCs have poured close to $1.6 billion into cannabis industry startups as of the end of July, up from under $1.2 billion in all of 2018, according to a recent report the data provider PitchBook.
It's also a huge jump from the $16 million invested in 2013, as Colorado became the first state to open its doors to the commercial cannabis industry.
For an industry that didn't exist — legally speaking — prior to 2012, that's astonishing growth.
"I think we've had a real advantage being one of the first institutional VC firms that have gotten involved in cannabis," said Andrea Hippeau, a principal at New York City-based venture capital firm Lerer Hippeau. "We really saw a once-in-a-decade or more opportunity where a whole new billion-dollar-plus market was being created."
Lerer Hippeau has so far invested in Leaflink, a tech platform for cannabis dispensaries, Vangst, a recruiting platform, and Herb, a cannabis media company, among other deals.
Read more: Buzzy cannabis-delivery startup Eaze is looking to raise a new round that could value it at $400 million
And Lerer Hippeau isn't alone among top VC firms in looking at cannabis deals. DCM Ventures invested in in pot delivery startup Eaze's $65 million Series C round last November, and held a CannaTech conference in May.
Greycroft, the firm led by venerable VC Alan Patricof, participated in the CBD company Prima's $3.3 million seed round earlier this year. Prima was founded by Christopher Gavigan, who started the Honest Company with actress Jessica Alba in 2012.
Tiger Global Management's venture capital side has invested in a number of cannabis-tech startups, including vape company Pax's whopping $420 million fundraising round — which valued the company at $1.7 billion in April — as well as Green Bits' Series A last year.
Though many VCs are interested in cannabis, most traditional Silicon Valley funds have so far shied away from investing directly into companies that sell and distribute THC since it is federally prohibited.
But cannabis tech, or the software startups that support the burgeoning industry, is fair game.
"I've always been a person who likes to deal with the picks and shovels of a new industry," Patricof said. "If I had been around in the gold mining days, I probably would have been selling picks and shovels."
Check out how VC spending in cannabis startups has increased since 2013:
'It's a once in a decade opportunity': How top VC firms like Greycroft and Lerer Hippeau are cautiously opening their doors to the potentially $194 billion cannabis industry
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