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Wednesday, April 15, 2015

VC: Legal Marijuana Market Is "Surging" Towards $100 Billion

Posted By on Wed, Apr 15, 2015 at 10:30 AM

David Chao is looking at billions. - DCM VENTURES
  • DCM Ventures
  • David Chao is looking at billions.
Once you're dealing with lots of zeroes, what's a few zeroes more? The legal marijuana market in America is on its way to being worth $100 billion, according to one sanguine venture capitalist (who just so happens to be investing in legal cannabis).

DCM Ventures, which has invested in such known quantities as anonymous social media platform Yik Yak, is the main firm behind a recently-announced $10 million investment in San Francisco-based Eaze. Called the "Uber of weed" many times over, Eaze is a "technology platform" that facilitates medical marijuana deliveries.

And it's also a great investment, according to DCM general partner David Chao. Chao's firm also supported Eaze's $1 million seed round in November — and why not? Legal weed is "surging towards $100 billion," Chao said in a release this week.

It's not clear from where Chao is getting his figures. Most estimates of the marijuana market's size are much, much lower.

The gold standard these days comes from an investor network called ArcView Group, which pegged legal weed sales in America at $2.4 billion last year. 

We are used to robust predictions of how big the weed market is going to be from those who stand to profit by a big weed market. Even so, a growth rate of 2,500% is above and beyond anything heard before.
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Even Eaze isn't sure where those numbers come from. Not that it matters. 

In a brief telephone interview on Monday, Eaze founder and CEO Keith McCarty (an early employee of business networking startup Yammer, which was acquired for $1.2 billion by Microsoft in 2012) focused instead on what his outfit plans on doing with the $10 million.

Eaze is available only in the Bay Area for right now. An Eaze user logs onto the startup's Web-based interface — no weed apps yet, thanks Apple and Google — and selects the weed desired. A deliveryperson arrives within 15 minutes with the weed in hand, which is then paid for in cash.

There's obviously a few things to improve about this arrangement, most of which will have to wait until cannabis businesses can freely use banks and credit cards and develop apps that won't get banned at the Play store.

Neither Eaze nor McCarty are waiting for those salad days of the future: the company plans to add 50 employees, McCarty said, and aggressively expand in California to get ready for the legalization that's promised us post-2016.

There are a few competitors who have jumped in the game since Eaze went live in August. This includes Y Combinator-backed Meadow, which also offers on-demand doctor's appointments for those too lazy to have given $40 to a prescription mill for the license to use medical cannabis. 

Eaze may also offer something like that, McCarty told us on Monday, without offering specifics.

Curious users can not only try Eaze, they can try it for free: the app is still offering free eighths to first time users who punch in promotion code TRYEAZE.

Because when you're on your way to the hundred-billion dollar pyramid, what's a few free eighths? 
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About The Author

Chris Roberts

Bio:
Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.

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