How to raise venture capital for a cannabis, ancillary-tech, or plant-touching startup in 2026.
Cannabis tech — plant-touching MSOs (Curaleaf, Green Thumb Industries / GTI, Trulieve, Verano, Cresco Labs, Ayr Wellness, Columbia Care / Cansortium, Jushi, TerrAscend, MedMen defunct), Canadian LPs (Canopy Growth, Tilray Brands / Aphria + Tilray + Sweetwater merger, Aurora, Cronos, Village Farms, OrganiGram, Charlotte's Web), ancillary tech (Leafly SPAC below $0.50, Weedmaps / WM Technology public, Dutchie post-Series D at $3.75B, Jane Technologies, Flowhub, Treez, LeafLink, Meadow, Blaze), delivery + logistics (Eaze, GreenDrop, Leaflink), lab + testing (Steep Hill, SC Labs), plus CBD (Charlotte's Web, CV Sciences, Elixinol) and hemp-derived Delta-8/9 gray-market operators — spans plant-touching (federally illegal, Schedule I pending Schedule III rescheduling), ancillary tech (federally legal but IRS Section 280E affects customers), and CBD / hemp (federally legal post-2018 Farm Bill).
Cannabis investors underwrite federal illegality (Schedule I under Controlled Substances Act pending DEA Schedule III rescheduling — DEA proposed May 2024, hearings 2025, contested by DOJ Office of Legal Counsel + former DEA officials, unclear final timeline), IRS Section 280E (plant-touching operators cannot deduct ordinary business expenses — pushes effective federal tax rates to 60-90% of gross profit), SAFE Banking Act still not passed as of 2026 (institutional banking + capital markets access remains blocked for plant-touching), state-by-state license + residency regimes (limited license states like Florida, Illinois, New York, Massachusetts, Ohio, New Jersey vs open-market California, Colorado, Oregon), and the MedMen collapse ($3B peak → 2024 Chapter 15 bankruptcy) as the reference cautionary tale.
Cannabis-focused funds: Poseidon (Emily Paxhia, active LP + GP), Casa Verde Capital (Snoop Dogg's fund, Karan Wadhera), Gron Ventures (Adam Bierman post-MedMen), Merida Capital (Mitch Baruchowitz), Panther Opportunity Fund, Salveo Capital (Jeff Howard), Navy Capital, Green Acre Capital, Delta Emerald Ventures, Tuatara Capital (Marc Riiska), Silver Spike Capital (SPAC sponsor + follow-ons), Halley Venture Partners, JW Asset Management, Measure 8 Venture Partners, plus family offices and high-net-worth individuals who dominate the LP base (institutional LPs largely blocked by cannabis exposure policies).
Multi-stage generalists active in cannabis ancillary (federally legal software / picks-and-shovels): Andreessen Horowitz (Flow Kana historic, Meadow), Founders Fund (via Founders Fund adjacencies), Lerer Hippeau (Dutchie), 8VC, Thrive Capital (Dutchie), Tiger Global (Dutchie peak round), Casa Verde + Snoop, plus Gotham Green Partners, Subversive Capital (SPAC + follow-ons).
Strategic capital + acquirers: MSOs (Curaleaf, GTI / Green Thumb, Trulieve, Verano, Cresco Labs, Ayr Wellness, Cansortium, Jushi, TerrAscend — most active plant-touching acquirers), Canadian LPs (Canopy Growth with Constellation Brands 38% stake $4B 2018-2020, Tilray Brands post-Aphria + Sweetwater merger, Aurora post-restructuring, Cronos with Altria 45% stake, Village Farms, OrganiGram with British American Tobacco strategic), tobacco strategics (Altria / Cronos, Imperial Brands / Auxly, British American Tobacco / OrganiGram + Charlotte's Web stake, Philip Morris hemp-adjacent), alcohol strategics (Constellation / Canopy, Anheuser-Busch InBev / Tilray-Sweetwater, Molson Coors / Truss beverage JV), plus ancillary strategics (Weedmaps / WM Technology, Dutchie, Leafly, Jane Technologies, Flowhub, Treez, LeafLink).
HHS recommended rescheduling from Schedule I to Schedule III in August 2023. DEA published proposed rule May 2024 (comment period through July 2024). Administrative law judge hearings scheduled 2025 but delayed and contested. Multiple parties (former DEA officials, some state AGs) have filed challenges. As of 2026, final rescheduling remains uncertain.
Rescheduling to Schedule III would eliminate Section 280E for plant-touching operators (massive P&L unlock — some MSOs would see 30-60% EBITDA improvement overnight). Would NOT federally legalize adult-use, would NOT resolve SAFE Banking, would NOT enable interstate commerce, and would create new FDA + DEA regulatory oversight for cannabis medicines.
Investors underwrite deals with and without rescheduling. Do not model rescheduling as base case — model as upside optionality with named catalyst timing.
IRS Section 280E (since 1982, applied to cannabis via CSA Schedule I status) prohibits plant-touching businesses from deducting ordinary business expenses. Effective federal tax rate on gross profit is 60-90% for retail dispensaries. Ancillary businesses (software, real estate, professional services, hardware) are NOT subject to 280E.
SAFE Banking Act (Secure and Fair Enforcement) has passed the House multiple times (2019, 2021, 2022) but never the Senate. As of 2026, still not law. Plant-touching operators cannot access mainstream banking, credit cards, standard payroll, or institutional capital markets. Workaround infrastructure (specialty banks like Safe Harbor Financial, ATM cash operators, closed-loop payment systems) is expensive and fragile.
US capital markets access: plant-touching MSOs cannot list on NYSE or NASDAQ (must list on Canadian Securities Exchange, OTC pink sheets, or through Canadian TSX). This structural constraint depresses MSO valuations 30-60% vs comparable non-cannabis operators.
Ancillary tech companies (Weedmaps / WM Technology, Leafly SPAC, Dutchie) can list on US exchanges but face customer credit risk when MSOs stress (Leafly SPAC below $0.50, WM Technology below $1 at trough).
Limited-license states (Florida, Illinois, New York, Massachusetts, Ohio, New Jersey, Pennsylvania, Maryland, Missouri) — vertical integration required, license count capped, license values $10-100M+ per state, MSO M&A concentrates market. Open-market states (California, Colorado, Oregon, Washington, Michigan, Nevada) — thousands of licenses, race-to-bottom commodity pricing, gross margins compress. Residency requirements (some states require in-state ownership or exclude out-of-state MSOs). Social equity licenses (New York, Illinois, Massachusetts, New Jersey, Connecticut) — SE-only license classes with own capital access constraints. Investors underwrite state-by-state, not blended national economics.
Modeling plant-touching economics without Section 280E — investors immediately spot this. Assuming DEA Schedule III rescheduling as base case rather than upside optionality with timing risk. Modeling SAFE Banking passage as capital-access assumption. Confusing plant-touching (280E, federally illegal, US exchange-blocked) with ancillary tech (federally legal, no 280E). Not naming target MSO acquirer explicitly (Curaleaf / GTI / Trulieve / Verano / Cresco most active). Ignoring the MedMen collapse ($3B → 2024 Chapter 15 bankruptcy) as reference cautionary tale. Ignoring state-by-state license regime variation. Assuming institutional LPs will invest — most cannabis LPs are family offices + HNWIs due to institutional cannabis-exposure policies.
Investor directory · Fundraising library · Articles A–Z · Company funding database