Cannabis Capital Raising is Maturing Here’s How…

Troy Dayton CEO of Arcview Group

With the cannabis market projected to hit $31 billion by 2021, it’s easy to feel like the industry has simply taken on its own momentum.

However, what most people don’t know is that there’s a group of investors called The Arcview Group that funds the very companies we’ll be reading about in the headlines 1-2 years from now.

In this episode, founder and CEO of Arcview Troy Dayton gives us an in-depth look at the goings-on at Arcview, shares his insights on the future of cannabis, and provides some invaluable advice for those looking to take the plunge.

Learn more at

Key Takeaways:

  • The cannabis industry’s current landscape and where Troy sees it heading over the next few years
  • How The Arcview Group has evolved from angel investors to now also include venture capitalists and large companies looking to make acquisitions
  • Overlaps in the entertainment and cannabis industries and how this could positively influence cannabis’ growth
  • The amount of capital Arcview investors have invested to date and projections for the future
  • Troy’s advice on what to look for when investing in startups
  • A deep dive into Arcview Ventures and Arcview Market Research
  • What it will take for cannabis to become as established as other industries and start seeing more interstate commerce


Click Here to Read Full Transcript

Matthew: Hi, I'm Matthew Kind. Every Monday, I look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly-evolving cannabis industry. Learn more at That's Now, here's your program.

Many of us read the cannabis headlines and awe each day. We see an industry exploding, it just seems like things are happening of their own momentum. But there's a group of angel investors that meet several times a year and fund the companies that we'll be talking about one to two years from now as we read about them in the headlines. The name of that angel investing group is called the Arcview Group. And today, I'm excited to welcome back Arcview's founder and CEO, Troy Dayton. Troy, welcome back to CannaInsider.

Troy: Thanks for having me, Matt, it's great to be back.

Matthew: Give us a sense of geography, where are you at today, Oakland?

Troy: I'm in Oakland, California.

Matthew: Great. And Troy, you've been on the show twice before, and we talked about your background and cannabis advocacy and your pivot into creating Arcview, so today, let's focus on investing. So just so people can get their bearings, the first time you were on, we talked about Colorado and Washington as they were kind of the focal point, and now we have 33 states with medical or adult use, and so much has changed. What is your 10,000-foot view of where we're at right now, and the context of how you view the cannabis landscape?

Troy: Yeah, you know, really ever since 2012 when Colorado passed legalization, we've been at just an incredible inflection point, and at any time you check in, it's like, "Well, we're at an inflection point, right?" But it's always been true. And I think, you know, there's just an endless stream of superlatives for the last, you know, seven years, but this batch of superlatives is really seeing this massive increase in the amount of investment. You know, there was over a 3X increase in investment into the cannabis sector in 2018 over 2017. That's incredible, and in fact, there was more money invested into cannabis companies last year than there was legal cannabis purchased. So to give you a sense as to what's changed, it's...there's now...the investment community has caught on to the fact of what you and I have known for quite a while, which is that the compound annual growth rate for the cannabis industry is tremendous. In fact, from 2018 to 2019, we project a 36% increase, which will be the largest increase in a single year that we've ever seen.

And so the investment community is responding to that. And I think the investment community is really noticing that the barriers that have really kept them out for the last, you know, five, six years, they can taste the evaporation of those barriers. Things like banking, things like end to federal prohibition, things like the IRS tax code issues, and some of the stabilization that needs to happen in the state markets for it to be conducive to activity, and then of course, what's happening worldwide. And even though we're not there yet on any of those issues and those barriers evaporating, the fact that the capital is starting to pour in ahead of that is a good signal that the smartest people are...can really sense the end of these barriers coming in the not too distant future. And as we get closer, the level of investor and the amount of money that they're going to pour in is going to even eclipse what we're seeing today. Because, despite the fact that we are seeing a lot more investment, it's still surprisingly capital constrained when you consider the opportunity relative to other industries that have similar opportunities.

Matthew: Now let's rewind to your last events. Can you tell us where that was at and in terms of the tone of the entrepreneurs' pitching and the sentiment of the investors, can you tell us, give us a little color around that?

Troy: Yeah, so our last event was in Los Angeles in the beginning of February. And, you know, I think the biggest thing is, it's interesting listening to your intro about angel investors, that's kind of like, that's an old story. I mean, we were only angel investors because that's the type of investors that were involved in the cannabis sector for the first, you know, six or seven years of Arcview, but it's really changed. I would say angel investors are a minority of the attendees at our events.

Matthew: Oh really? How has that changed then? What's the makeup now?

Troy: Well, there's a lot of venture funds, you know, people who were originally angel investors with their private money but we're full-time investment professionals in their day jobs, but those people weren't involved...either those firms have gotten involved, or those people have started their own firms to deploy capital. And so, it's a little bit of a different thing. Then there's also larger companies that are looking to make acquisitions in this space and partnerships in this space that are there, as well as public companies, companies that were raising capital at one point, and maybe are still, but are simultaneously looking to make acquisitions. So we have a lot of the bigger public companies that now have pretty huge market capitalizations and can use that to buy other companies, so a lot of those companies are there as well, and then a few more ultra-high-net-worth people, or people representing ultra-high-net-worth people.

So I would say, you know, of the investors at the event, I would say, you know, less than 30% primarily identify as angel investors. Of course, across the board, you've got people placing some of their own personal money into these things. But that's really changed, and that was particularly evident at our last Los Angeles event.

And I'd say the sentiment is that, you know, the companies have to be really good. Like people are not supporting companies that are not amazing, right? That don't present really well. And I think, you know, in the past, in years previous, the competition just wasn't as stiff as it is today. And so what you're seeing is companies recruiting out of big alcohol, and big tobacco, and big natural-products world. They're recruiting out of these top companies, and bringing them into these companies. And that's one of the big shifts that we're seeing. And I think, you know, there's also a lot more attention to data and macro trends, and less gut-level business. It's all we used to have was our guts, right?

Matthew: Right.

Troy: And now, there is this world of data, and, you know, making larger, higher leveraged decisions, because as companies are growing and moving into their A, and, B, and C stages, it's a whole different ballgame. And then when you look at the startups, you either have people focusing on smaller and smaller niches of problems, or people bringing incredible backgrounds and whole new better mousetraps to solve the problems for which there are already a dozen or so companies trying to solve that problem for. So it's really a different ballgame.

Matthew: And since that event was in L.A., did you see any kind of more dovetailing of the entertainment industry with the cannabis industry?

Troy: Absolutely, I mean the entertainment industry sees the opportunity here. There's so much overlap between culture and cannabis, and particularly with a lot of celebrities getting involved as well, and some of the advertising restrictions paradoxically opened up more opportunity because you know that... How else are you going to get your products in people's minds other than through various entertainment means and things like that? So absolutely seeing more of that.

Matthew: And I know you typically have this information on the tip of your tongue, so what much capital have Arcview Investors invested to date?

Troy: Well, of what we know of, which we are 90% sure is just this fraction of what's actually happening now, we used to be able to track this much closer, but during this explosion of capital, it has become much harder to track what's happening in our group, but we've counted over $240 million invested into a little over 200 companies in the cannabis sector just from our members to companies that have come through our ecosystem.

Matthew: Okay. And can you think of an entrepreneur that maybe didn't have their best showing initially, but took the feedback that was given from investors in the ecosystem and improved? Because there's some pressure up there, if you go on stage and you don't have a background in presentation or anything like that. It's not something that everybody feels totally comfortable with out of the gate. Some people are just naturals. But for someone that's not, have you seen someone evolve and then go back out and like really nail on the second or third time?

Troy: Well, nowadays you don't really get second and third times, right?

Matthew: Okay.

Troy: I mean, it's so competitive now that, you know, you really gotta be really good, or you've got to have a really good business. And that's the other thing I would say is, it's no longer so much about presentation as it is about fundamentals, and about having a good track record. And so certainly, you know, you see people who have a strong business and a strong background, they don't need to be that great of a presenter if they've got those other things because especially as we shift into more professional investors who, it's their job to look at this stuff, it's a little harder to just be a, "Wow" presenter, and really get through it. And so there's two examples I would give of companies that have had major struggles and have reinvigorated investors' interest and gotten them re-excited of companies that have been really involved with Arcview over the years. And I would say, both ebbu and MJ Freeway are, kind of, in that boat. For a background, ebbu recently sold for over $300 million to Canopy Growth.

Matthew: Right. I saw that. Yeah.

Troy: And ebbu, you know, raised a good portion of their early capital through Arcview members and then, you know, ran into some issues and some challenges and their sales weren't going well and there was leadership changes, and...really tough. And, you know, a lot of people thought, "Oh wow, we were counting this company out." And then, you know, they were able to turn it around. They pivoted their business model to an intellectual property model, and turned around and sold it a few years later for just an enormous multiple. And I think that's a story where it shows you that, you know...there's this term in poker where you say, "All you need is a chip and a chair." If you still are sitting at the table and you have a chip left, you've got a chance. And some people do their best when they're...necessity is the mother of invention and they are up against the wall, and they've got to figure out how to make one or two chips be their saving grace. And that's what makes being in business and being in an industry as volatile as the cannabis industry. It's just part of what makes it exciting, it's part of why we all play the game, right? And I think that's a great example of it.

Matthew: Yeah, and there're colorful people in this industry to begin with. And when then you put them up against the kind of those circumstances, things's like an episode of VH1 "Behind the Music." Like incredible things happen that people will be talking about for a long time.

Now, what are the most common questions you get from investors that are kind of thinking about joining Arcview, and how have those questions changed from when you first started to today? I mean, it sounds like the industry is maturing quite a bit from your vantage point, so are the questions more, not so much seed-stage-investment-type questions, but more mature market questions?

Troy: Yeah, yeah. I think you know, initially, people were like, " I'm excited about the cannabis industry, I read about it in the news, how do I get involved?" And they would call and they would know nothing, right? And they would have no access to deals in this space. Now it's pretty rare to run into somebody who has no exposure to understanding some of the metrics or... I mean, even now, it's pretty hard to run into somebody that hasn't looked at a few deals in this space and doesn't have a census to like the different aspects of the business, at least at a surface level. And so, I think what really makes the difference now is about building peer networks of trust with other investors and other companies. It's not just about deal flow, it's about how you wind up negotiating with those companies. It's about how you place that capital, it's the kind of a network that you build because I think people more and more understand that this is, you know, ultimately a relational game.

And it used to be that any company that was big enough to be in an A round or a B round would already know them. But now, there's no single investor that could actually wrap their whole head around all of the opportunities for companies that are now in growth phase. There's just too many of them to keep your head around them. And so that's where having the kinds of relationships that bring you certain deals that... And the other thing is that deals are getting snapped up now, it's not like it used to be that every company had a tough time raising capital. Well now, you've got deals that only get passed around 10, 15 people before they're done. And so, that's why it's important to really know the other people in this space, and to build those trust networks, and to show them that you're somebody that you want them to show you a deal. And increasingly, more of the deals that are getting done, you know... I don't...I've never even... You know, they just...they kind of flow through the group in various ways.

Matthew: Okay. Now, how can an investor get very comfortable with a startup? Because one of the questions I get emailed most frequently is that, "I'm considering investing in a company, but I can't tell if they're legit or if the management team's any good." And I have no answer for that. How do you tell? I mean, that's a subjective thing, but maybe you could talk about how investors get to that comfort level. What is the most typical things people do to get to comfort?

Troy: Yeah. A couple of things and this is...and the answer to this is the reason why we created Arcview, right? Which is that this is the hardest question, and I don't purport to have the answer nor should anybody, right? There's a couple of ways that you do it, and they all involve other people. So which is, you know, the first is, you want to look at a couple other deals in the similar vein, right? If you're looking at a packaging company, and you're trying to evaluate this strategy, and you're trying to evaluate this particular team, and the valuation, how many other packaging company deals have you looked at? If it's not at least five or six, then you don't have enough information to look at this. Or if you've got to find somebody else who's looked at a bunch of different packaging deals and have them give you their feedback on how this one compares.

Secondly, it's about knowing what you don't know. You know, if you're in the packaging business, well then you probably will do a pretty decent job of evaluating this packaging company, but if you're not in the packaging business, then you've got to talk to some people who come out of that realm and learn about what they know.

And then the other is to be connected with customers, and not just customers that you pick up the phone and call, but, you know, people where you have the kind of exposure and relationship with where they'll give you the real deal, right, as opposed to just getting references from the company. And, you know, they're very few ways to do that very efficiently, which is why we've put together our group, which is so you get in one place, with a lot of these folks, as well as, you know, through an online platform, and then also through our team, which who can connect you to the people that you're most needing to connect to to evaluate a deal. Now there are certainly ways to do that without Arcview or a group like ours, but it's just more work.

Matthew: Yeah. And there's more arms to Arcview now, there's Arcview Ventures, there's Arcview Market Research, maybe you can tell us a little bit about Ventures to start.

Troy: Yeah. So three, four months ago, we launched Arcview Ventures, which is a venture fund, and we are in the, kind of, raising phase for that right now, and Brian Shang and Jeanne Sullivan are our general partners for that. And we're going to be really focused on A stage, growth A and B stage, sort of, growth stage companies in the hemp, and brands and, technology space...agricultural technology space as well as, you know, software and things like that, and really, really focused on that. And I feel like we've got a unique role to play there given all of the exposure that we have to potential deals.

Matthew: And you've also been producing reports here for a number of years, the Arcview Market Research State of Legal Marijuana Markets is probably the most well known, but can you talk a little bit about the research that you're generating and how that works and maybe the partnership with BDS?

Troy: Yeah, yeah. So, I'll start back a little further which one of our main partnerships and things that we've worked on is creating CanopyBoulder, which is a seed stage mentor-driven accelerator in Boulder. And one of the companies that came through CanopyBoulder was BDS Analytics. And right as that was happening, Arcview, who had been producing these market reports for years, realized that this industry was maturing, and as it needed more data and more data was starting to become available, and we had to decide, are we going to become, you know, a data company in order to do this or are we going to partner? And we thought, you know, "Hey, that's not what we really...we don't really, really know the deep data. We understand the market, and we can make sense of data, right, but we're not going to be the one that's generating it." And so we partnered with BDS to, you know, meet the needs of an evolving, maturing industry.

And so, we've been putting out reports with them for a few years now, and it's really raised the bar for the cannabis sector and has really become sort of the industry Bible, so to speak. And, you know, we released a semi-annual update to our sixth edition of "The State of Legal Marijuana Markets." We'll be coming out with the seventh edition very soon. And it's, you know, it' know, your listeners are big purchasers of our market reports and big downloaders of our executive summaries, but, you know, we really try and give a really big overview of what's happening, and then, we've also been putting out a lot of reports that go specifically into certain topics, so going into concentrates. We just put one out about how pharmacies and dispensaries are going. The pharmaceutical industry and then the state-regulated industry, how those two industries are going to compete with each other, and what the dynamics are there between pharmaceutical development with cannabinoids versus, you know, oftentimes having that very same product basically available for a fraction of the cost at a local dispensary, those sorts of dynamics. So we're putting out a new report every, you know, four to six weeks now, based on that, and so people can subscribe to the Cannabis Intelligence Briefing service, which gives you access to everything as it comes out.

Matthew: Okay. And what do you think is in store for the cannabis industry in the next three to five years that might surprise people that they don't see around the corner that you feel like not enough attention is being paid to but you see it pretty clearly?

Troy: Yeah. So, one of those is about this question of valuations and execution, right? So we were in this phase right now where the companies... Most of the value here has been created recently by moving assets around, essentially, M&A, mergers, and acquisitions, bringing companies on the public markets and seeing, you know, a big arbitrage between private company valuations and public company valuations. This is where most of the money's being created right now. But once you bring all these disparate elements together and you move it to the public markets, which gives it more access to capital, and, you know, there's all this financial engineering that happens, right? At the end of the day, the real measure of whether a company is going to succeed is whether or not they can get these disparate elements to work together, which means getting the right talented people to work well with other really talented people.

And at the end of the day, everything in a business revolves around getting people to work together to execute on a vision. It's not about selling that vision to investors, it's about actually executing on it. And that's going to be hard, that's going to be hard to do, especially for companies that are making an acquisition every month or two to get those systems actually working synergistically together, and get those people actually working synergistically in a way that creates efficiency, and then ultimately, it really rests on whether or not they can make regulators and customers happy at the same time, and to be able to use all of that, to make that happen. That's what's going to really, ultimately make these companies valuable, not all the financial engineering and stuff that's happening right now. So, I think that's really important, which is one of the reasons why, you know, recruiting is such a big deal, and I think we're going to see a lot more management consulting, and executive retreats, and these sorts of things because we're going to need to get everybody working together. So it starts to look a lot more like other industries very quickly.

Another aspect that I feel is under considered is....everybody thinks interstate commerce is just going to happen. That like, as soon as the STATES Act passes or anything happens at the federal level, all of a sudden states are going to be able to trade and countries are going to be able to trade, but I don't think that's how it's going to work. I think particularly in these Northeastern states, in Florida and these sorts of places that have very limited licensing, I think they're going to hold on for dear life to the regulatory models. They do not want to be competing with other states and other tax codes and these sorts of things. I think maybe in the West, there'll be a little bit more interest in this because they're a little bit more open-type markets instead of very constrained, but I think eventually court cases will bust it open and will cause there to be interstate commerce. But I think that we're looking at probably two to four years after the effective end of federal prohibition before we really start seeing interstate commerce. And so, I think people that are making their business models based on the idea that we're going to be able to trade back and forth very soon, I think they're mistaken.

Matthew: Interesting.

Troy: Yeah. And then the other thing, which is sort of the obvious elephant in the room, so it's not really unique for me to be saying it right now, but hemp and CBD are going bananas. I mean, this is wild and I... You know, I think we're all trying to wrap our heads around it, frankly.

Matthew: Okay. Troy, I'd like to ask a few personal development questions to help listeners understand who you are individually, and I've asked you some of my favorites in the past, so I've come up with some new ones here for you. Is there a best practice that you've implemented in your business that has been really helpful that you'd like to share?

Troy: Yeah, so one of the things we've been doing at Arcview for years now is, once a week the whole team gets together, and we do a couple of breathing exercises just to center ourselves just for 30 seconds or so to get present. And then each person goes around the room and they say somebody that they appreciate on the team and why, what they appreciate about them specifically, it can't be like a general thing. Then they say what it is that's on the top of their mind workwise, like what's the big thing that they want to accomplish this week or this day, and that gives everybody a sense of, you know, what everybody's working on. And sometimes in an organization, it's harder really to get a sense as to what other people are working on, and that helps to create more synergy with people. And then any bottlenecks, anything that's in the way, because oftentimes someone will say that something's in the way, and it turns out, somebody else has the solution to that, or there can be some more empathy for whatever they're going through. And then lastly is celebration, right? And oftentimes these are more in people's personal lives, right, really humanizes people in the workplace. And, you know, this has been, you know, kind of a thing we do once a week, and I think it's made a huge difference in morale, and a huge difference in people feeling appreciated, and to formalize it in that way.

Matthew: Great. Is there an opinion that you used to hold really firmly, have had for a long time that has changed in the last 18 months?

Troy: Yeah. This is related to the cannabis sector, hemp-derived CBD. You know, for a long time I kind of thought that hemp-derived CBD was not going to ultimately be a thing because it didn't have as strong of an impact on people as when there was THC involved. And then there was this on... You know, Sanjay Gupta had his whole special about, you know, what we talked about, "the entourage effect" and all of this. But consumers seem to be buying up hemp-derived CBD, and there are credible brands and credible people that are now supporting and coming out with products that are from hemp-derived CBD.

And so, I think I was likely mistaken there. I mean, you know, time will tell whether this is a flash in the pan, kind of, hot trend that's going to dissipate, or whether it's real, but I know lots of people who are using hemp-derived CBD and saying that it helps them with the issues that they're dealing with. So yeah, that's one area where I think I was probably wrong, but I don't think I was alone there. I think a lot of people in our industry and probably many people still share that opinion. But at the end of the day, the consumer is king.

Matthew: Now, Troy, if you were not in the cannabis industry and you had a career that was solely for fun, what, what would it be?

Troy: But Matt, this is so much fun.

Matthew: It is fun, it is fun. I mean, I mean just totally fun, not in the cannabis industry.

Troy: Yeah, what I love doing is bringing people together in interesting unique ways, which is some of what we do at Arcview, but it's less about the topic, whether it's cannabis or anything else, and it's more about this idea that humans are magic, and that when you put them together in the right type of context, with the right kind of prompts, and the right kind of intention, that magical things can happen for people, and they can feel, you know, transcendence, and they can feel connection in a way that they didn't think they could feel connection with, particularly when it's across difference. You know, people, they didn't think they would connect with that turns out that they can. And I love creating those kinds of contexts, whether business or personal.

You know, for example, a friend's wedding recently, I led a group exercise that got people connected and it's one of these multiple-day weddings, and it was really powerful to see how... You know, people at weddings, they fuss over the flowers, they fuss over the band, and the food and all of this kind of stuff, but usually what a couple really wants is for their family members who are from disparate areas and different subcultures and different ages, they wanted them to bond. They want those people to bond and to connect and feel good about each other, and this was an opportunity to put some real focus on that in a way that I think might have achieved the goal. So that's the kind of stuff I get excited about.

Matthew: Oh, cool. What did you have them do?

Troy: There are a number of... It's different ways of putting people in contact where they get to see how similar they are, and then also really appreciate the ways in which they're different in a way that is that is fun for them, makes them feel closer.

Matthew: Okay. Well, Troy, that's for coming on the show today. As we close, can you tell listeners how they can find out about your next event, about the research and anything else you'd like them to know?

Troy: Yes. You can go to or and I think our website is very explanatory about all those things. And our next event will be in Vancouver, April 23rd through 25th. It's a beautiful venue, it's a beautiful time to be in Vancouver, and if you qualify, we would love to have you.

Matthew: And accredited investors are the ones who qualify, and just go to your website and fill out the form, or to speak with someone, or book a call or something like that?

Troy: Correct. Exactly.

Matthew: Okay. Troy, thanks so much for coming on today. We've got a really exciting future, and I'm glad to be part of it with you.

Troy: Yeah, congrats on all your success as well.

Matthew: Thanks, Troy.

Man: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher, or whatever app you might be using to listen to the show. Every five-star review helps us to bring the best guests to you. Learn more at What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at

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Matthew: Final disclosure to see if you're still paying attention, this little whistle jingle you're listening to, will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.