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XWatch: dot.LA's Strategy Session Discussion Asks, Is the Green Rush Over?
Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.

California is the world's largest legal pot market, generating nearly $3.1 billion in spending in the Golden State alone. But cannabis-related businesses in the U.S. live in a legal-limbo, operating in this strange gray area between federal laws that make marijuana illegal and states that have decriminalized its use and sale entirely. This has led to sometimes difficult choices, workarounds and issues with which the cannabis and cannabis-linked companies are forced to contend.
dot.LA dove into this tenuous landscape during a virtual panel discussion on Tuesday with experts in cannabis compliance and legal issues, asking them: Is the green rush over? The consensus seemed to be that no, it isn't, but this first wave of "reckless money," likely is.
Tuesday's conversation on the current state and future of California's marijuana marketplace capped off the conclusion of dot.LA's five-part investigative series examining the rapid rise and rapid fall of L.A.-based Genius Fund, a one-time $164 million cannabis company. Today that money is gone and their Russian oligarch investor is dead.
"There was some irrational exuberance at the beginning of this, of where the money might be, and everybody kind of had their own product or their own brand and own hype," said Andrew Freedman, senior vice president at Forbes Tate Partners, who served as Colorado's first director of cannabis coordination. People were "getting money from places that either maybe weren't the most legitimate or were just people who were just way too excited, before knowing if there was a business plan there."
Part of the problem is the illicit market is "an absolute monster" at three times the size of the licensed market in California, said Brad Rowe, a public policy lecturer at University of California, Los Angeles and expert on cannabis legalization issues who works with municipalities across California on compliance issues.
"The first wave was a lot of excited money, but not necessarily well informed money," said Tanya Hoke, a managing director of Galen Diligence, who advises investors in the cannabis industry on issues related to fraud and compliance. "There wasn't sufficient sort of appreciation for the complexity of operating successfully in this space."
"If we want to prioritize overcoming the illicit market and reinvesting in communities, that doesn't happen automatically just when we legalize," Hoke said. "I think the difficult work of grappling with that can happen now that there's a little more space and the first wave has sort of pulled out."
Freedman said there are many big opportunities for what could ultimately be a $60 to $900 billion U.S. industry and potentially a $300 billion global industry, noting that "that money's still there."
"There were a lot of people that wanted to make money very quickly. Some of them did, but a lot of them lost money for a lot of people," Freedman said. "So it's time for a deep breath and to take this knowing that this is gonna be a very difficult place to make that kind of money."
Rowe said he is bullish long term, "this will be a footnote in history, a tumultuous one for sure."
Part of it requires firms and companies to pay attention to more than just grabbing market share and throwing money at stuff, Rowe said. The cannabis market is unique in its own way. Investors and founders need to be aware of that and be ready to not rely on federal support. The COVID-19 pandemic has crystallized that, as none of that federal aid available to businesses can go to cannabis businesses, Hoke said.
There are other issues too like not being able to access a bank account, working in all cash, "onerous federal income tax liabilities," and not being able to seek bankruptcy in federal court. Those limitations, more than arrests, indictments or raids, become "day-to-day pain points of running a business," said Hilary Bricken, a partner with Harris Bricken, who has heavily focused on the cannabis industry.
She added: "I think investors and entrepreneurs forget these are democratic experiences that are federally illegal. As far as the feds are concerned, they don't care if we all crash and burn and these things fail entirely. And that is a really tough tension to deal with as an institutional investor or an entrepreneur, when you're very used to being able to get a bank account, having equitable taxation and just the normal business opportunities that come with a normal emerging market. But this is not that."
For more from the virtual panel, including a discussion on the money that the industry has attracted and social equity issues, tune into the video.
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Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me at tami(at)dot.la, or ask for my contact on Signal, for more secure and private communications.
dot.LA Strategy Session: Is the Green Rush Over?www.youtube.com
About the Speakers:
Hilary Bricken, Partner of Harris Bricken
Hilary Bricken, Partner of Harris Bricken
Since joining Harris Bricken in 2010, Hilary has earned a reputation as an exceptional and fearless business law attorney. Hilary's clients—start-ups, entrepreneurs, and companies in all stages of development—value her bold approach to business strategy. Hilary also appears before city councils and community forums, where she advocates tirelessly for her clients.
In 2017, the American Bar Association (ABA) named Hilary one of the top 40 young lawyers nationwide and before that The Puget Sound Business Journal named her as one of only seven deal makers of the year. She was by far the youngest and the only private practice attorney to garner this honor. Hilary was also named one of "40 Under 40" leading businesspeople by the PS Business Journal. In every year since 2014, Hilary has been chosen as a "Rising Star" lawyer by Super Lawyer's magazine.
Major media outlets like the New York Times, VICE, the Los Angeles Times, Chicago Tribune, Business Insider, CNN, Rolling Stone, Forbes, MSNBC, and Bloomberg all have turned to Hilary for her on-the-ground perspective on cannabis laws. Hilary's Tedx talk on "big cannabis" (see below) has garnered more than 50,000 views and she also authors a weekly column for Above the Law on marijuana policy and regulation.
Tanya Hoke, Managing Director of Galen Diligence
Tanya Hoke, Managing Director of Galen Diligence
Tanya has more than a dozen years of experience managing investigative due diligence for clients in industries ranging from pharmaceuticals and manufacturing to financial services and consulting. She has been advising investors in the cannabis industry since 2015, and focuses on issues relating to fraud, money-laundering, compliance, and corporate governance. Tanya is a Certified Fraud Examiner, a Certified Anti-Money Laundering Specialist, and a licensed private investigator. She has served on the National Cannabis Industry Association's Banking & Financial Services Committee and the State Regulations Committee. Tanya received a Bachelor of Arts degree from Swarthmore College and a Master of International Business degree from the Fletcher School at Tufts University, where she serves on the MIB Alumni Advisory Board.
Brad Rowe, Director of Compliance, Operations and Regulations Analyst of Rowe Policy Media
Brad Rowe, Director of Compliance, Operations and Regulations Analyst of Rowe Policy Media
Brad has designed, implemented and delivered a dozen public policy research projects over the last six years through his time running BOTEC Analysis, at UCLA and with Avenu/MuniServices Cannabis Compliance and Support Services and Rowe Policy + Media. Brad is Lecturer of Public Policy at UCLA Luskin School of Public Affairs and recently started teaching Cannabis Policy and Society, the first of its kind in the country.
He serves as Advisor to the UCLA Cannabis Research Initiative, coordinating the Criminal and JuvenileJustice Research team and the California Cannabis Data Collection Project. He sat on the CommunityAdvisory Committee for the Los Angeles County Department of Health's impact assessment on cannabis.
In 2020 Brad has taken on the cannabis "dosing problem". To help naive and legacy consumers dose new cannabis products predictably and reliably. The HowHi App Data Project provides evidence based insights into the Quality, Duration and Amplitude of the cannabis experience. The variables are crowd-sourced via experiential self-reports on iOS and Android interfaces.
Andrew Freedman, Senior Vice President at Forbes Tate Partners
Andrew Freedman, Senior Vice President at Forbes Tate Partners
Andrew brings vast experience from his three years as the State of Colorado's first Director of Cannabis Coordination. During this time, he developed distinctive experience effectively implementing voter-mandated legalized adult-use and medical cannabis while protecting public health, maintaining public safety, and keeping cannabis out of the hands of children.
Andrew's role in developing a successful operating model for cannabis regulation and stakeholder collaboration was identified as one of the reasons for the State of Colorado's success in implementing adult-use cannabis legalization by the Brookings Institution. Governor Hickenlooper has gone so far as to praise Andrew's work while on national television, stating, "Andrew Freedman, who came in and helped us once it was passed . . . [has] done a remarkable job of creating a regulatory framework."
Andrew has received national recognition for his leadership. Men's Health Magazine named him one of the 30 most influential health influencers of the last 30 years. He was recognized as one of Fast Company's "100 Most Creative People in Business" in 2016. He has been featured on 60 Minutes, NBC Nightly News, The Today Show, The New York Times, The Washington Post, The Wall Street Journal, The Boston Globe, Governing Magazine, and dozens of local stories throughout the nation and internationally.
Tami Abdollah, Senior Reporter at dot.LA
Tami Abdollah, Senior Reporter at dot.LA
Tami Abdollah is dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer.
- The Rise and Fall of Genius Fund's $164M Cannabis Empire - dot.LA ›
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- California Cannabis is Getting New Clear Regulations - dot.LA ›
Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.
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Wavemaker 360 Launches New $64M Fund for Health Care Startups
Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.
Despite a venture funding slowdown that has not spared the health care and biotech sectors, one Los Angeles fund is looking to back its next crop of seed-stage health startups.
Wavemaker 360 Health, the Pasadena-based early-stage health care VC firm, announced on Thursday that it has closed its $64 million second fund—a haul nearly four times the size of its $17 million first fund, albeit smaller than the $100 million maximum target it set for itself two years ago. The new vehicle will look to invest in 40 to 50 early-stage startups mostly in the U.S. and across the health care spectrum, from digital health and pharma to medical devices and artificial intelligence.
“The health care industry might not be recession-proof—but the health care industry is about as recession-resistant as it gets,” Wavemaker general partner Jay Goss told dot.LA. “Human beings are always going to need health care. We have more and more health care products and services than ever before, and we have an aging population in this country.”
The new fund will initially invest up to $1 million in each startup and add more over time, Goss said. Wavemaker has already deployed capital from the second fund to 15 startups; one of them, Seattle-based remote patient monitoring platform Alertive Healthcare, has already rewarded Wavemaker with an exit via its acquisition by Carbon Health last year.
The VC firm raised the $64 million fund from around 300 limited partners (LPs)—nearly quadrupling the 80 investors who contributed to Wavemaker’s first fund, which closed in 2019. Those LPs include health care organizations like the Long Beach-based SCAN Foundation, a charity dedicated to improving care for older adults, as well as industry executives and physicians. Goss described Wavemaker’s investors as the fund’s “secret weapon,” since they provide its portfolio startups with access to key connections at hospitals, insurance companies and other industry groups.
“It's harder to get those first three or four or five commercial successes under your belt as a health care entrepreneur,” Goss said. “So we have so much ability to help these startups by virtue of who our limited partners are. We flex that muscle all over the health care industry.”
Wavemaker, which launched in 2018, now has more than $85 million in assets under management across its two funds. The firm has invested in around 45 startups to date including Ready, Set, Food!, an L.A.-based food allergy startup that received a $350,000 investment from Mark Cuban on “Shark Tank” in 2020.
Keerthi Vedantam is a bioscience reporter at dot.LA. She cut her teeth covering everything from cloud computing to 5G in San Francisco and Seattle. Before she covered tech, Keerthi reported on tribal lands and congressional policy in Washington, D.C. Connect with her on Twitter, Clubhouse (@keerthivedantam) or Signal at 408-470-0776.
Gander, an LA Startup Using Videos To Make Online Shopping Easier, Raises $4M
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Gander, a Los Angeles-based ecommerce startup that collects and embeds user-generated videos for online shopping sites, has raised $4.2 million in seed funding.
Two New York-based venture capital firms, Harlem Capital and Crossbeam Venture Partners, co-led the round and were joined by the Boon Fund and a collection of venture scouts and angel investors, TechCrunch reported Thursday. The new funding will go toward scaling the company and growing its sales and engineering teams.
Gander founder Kimiloluwa Fafowora.
Image courtesy of Gander
Gander was launched in 2021 by Kimiloluwa Fafowora, who just graduated from the Stanford Graduate School of Business this spring and has now joined the select ranks of Black female founders to have raised more than $1 million in venture capital funding. The startup was able to close the seed round in less than three months, Fafowora told TechCrunch.
Inspired by Fafowora’s own experiences as an online shopper, Gander collects user-generated videos of products and plugs them into retail sites, giving shoppers a better idea of what that product looks like in real life.
“A lot of the elements that are really helpful for bringing products to life don’t really exist online,” Fafowora told TechCrunch. “We’ve built our product in such a way that we get important data that will help ecommerce brands just humanize their stores in a way that makes them accessible as possible. That helps the customer feel happy as possible for shopping.”
After exploding during the pandemic, online shopping sales have continued to climb this year. U.S. ecommerce retail sales totaled an estimated $231.4 billion on a non-adjusted basis in the first quarter of 2022—up 6.7% from the same period last year, according to the Department of Commerce.
Decerry Donato is dot.LA's Editorial Fellow. Prior to that, she was an editorial intern at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Faraday Future Is Planning a New Factory in China
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
In an investor presentation filed with the SEC on Wednesday, the Gardena-based company said that it intends to open the factory as early as 2025, TechCrunch reported. While Faraday has yet to determine a specific location, it said the new plant should help it cut costs and lead times and reduce supply chain issues as it expands into the Chinese market. The facility will also house the company’s Chinese headquarters.
The factory will produce Faraday’s second and third vehicle models, the FF 81 and the FF 71, and will complement the automaker’s 1.1-million square-foot plant in Hanford, Calif., which is slated to open in July and eventually churn out 10,000 vehicles annually. In February, the company also announced a partnership with South Korean auto manufacturer Myoung Shin to help produce the FF 81.
Faraday plans to finally launch its first electric car, the FF 91, this fall—though it recently disclosed that it had only received 401 pre-orders for the vehicle by the end of March. The underwhelming response has been yet another blow for a company that’s had no shortage of issues in recent years—from financial troubles and leadership shakeups to investor lawsuits and regulatory probes.
Representatives for Faraday Future did not immediately return a request for comment.
- Faraday Future Looks to Grow in China - dot.LA ›
- Faraday Future Says Its First Car Will Go Into Production Next ... ›
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.