People used cannabis in large numbers during the height of the lockdowns caused by the pandemic. Investors, including big-name celebrities and well-known venture capital funds, are banking on that trend to continue as the pandemic lessens its hold on the country.

The interest in cannabis became apparent the moment lockdowns began as long lines formed at dispensaries. Many governments named cannabis dispensaries as essential businesses. Cannabis sales jumped 45 percent. Investors took notice.

A clear sign of this came in the recently announced deal involving Dutchie, the Oregon-based e-commerce platform. The company announced it raised $200 million in a funding round that valued Dutchie at $1.7 billion. Investors included NBA star Kevin Durant, former Starbucks CEO Howard Schultz and DoorDash co-founder Stanley Tang.

They’re not alone. Other celebrity investors in the cannabis industry include Joe Montana, who heads Liquid 2 Ventures, and Snoop Dogg, who founded Casa Verde Capital. Well-known firms such as Arcadian Capital in Beverly Hills and Phyto Partners in Boca Raton have also funded about a dozen cannabis tech startups.

Investment in cannabis tech has reached an 18-month high in early 2021

According to data compiled by Reuters, the Dutchie deal is one of many happening across North America involving cannabis tech companies. In total, the news service looked at 90 public and private cannabis tech companies and found private investment at the highest level since the pre-pandemic days 18 months ago.

The total amount of private investment in cannabis tech startups has reached $2.5 billion since 2018. Another $4.3 billion has been raised by public investors such as special purpose acquisition companies (SPACS). About $1.7 billion of that money has yet to be deployed into the market.

What’s more, publicly traded companies—most of them in Canada—have started to rebound after a disastrous 2019 that saw big selloffs in the industry. “We’re still in the very early innings” of investing, Harrison Aaron, an investment analyst with Gotham Green Partners, told Reuters.

The complexity of the cannabis industry should leave room for local entrepreneurs.

Many companies are trying to get established in the cannabis industry before federal law makes cannabis legal at the national level. That’s the current situation in Canada and looks to be soon in Mexico, as well. Many see it as inevitable in the United States.

However, many companies are not in a rush, according to business leaders already in the industry. Established cannabis companies want more time to grow. Also, businesses established in other industries want time to figure out the best way to enter the cannabis industry. Just the software issues alone are daunting. 

“Cannabis legislation, regulations, and supply chain flows create complexity that is not built into software made for other industries,” David Hua, founder and CEO of Meadow, which sells compliance and operating software for cannabis retailers, told Reuters.

That leaves plenty of room for growth for software companies and other services that work exclusively with cannabis. Still, there are concerns about a “corporatization” of the industry and the loss of business for local dispensaries.

For example, Dutchie has heard concerns that the company will start selling directly to online customers rather than working through dispensaries. But Dutchie co-founder and CEO Ross Lipson told TechCrunch that is not the case.

His answer seemed to reflect what the common wisdom is on how the cannabis industry will continue to operate. “Longer term, this is a retail-first model,” Lipton said. “The nature of this industry lends itself to a hyperlocal model largely because of the way that plants are cultivated and processed, so I believe retail will remain intact and continue to be successful.”