Since Washington and Colorado became the first states to legalize recreational marijuana use in 2012, the number of retailers, processors and distributors has exploded.
Seattle-based startup Headset wants to be the business intelligence platform for them all and it just raised $12.1 million to drive expansion. The Series A funding round, led by Poseidon Asset Management and AFI Capital Partners, is Headset’s largest to date.
The company will use the money to expand offerings to more states and international markets and to target new customers in packaged goods, beverages and finance that are interested in the marijuana industry.
The Seattle-based company was started by Leafly co-founders Cy Scott, Brian Wansolich and Scott Vickers in 2015. Leafly, a marijuana strain and dispensary resource platform, was acquired by Seattle-based marijuana investment firm Privateer Holdings in 2011.
Headset is similar to business intelligence services from firms like Nielsen and IRi. The company operates data platforms for retailers and suppliers, as well as a tool to analyze cannabis market data.
“As investors, we see the need for data to inform investment and M&A strategies,” Emily Paxhia, managing director of Poseidon Asset Management, said in a statement. “Headset is already tracking billions of dollars of transactions both in the U.S. and Canada.”
Companies in the cannabis industry raised nearly $14 billion from investors in 2018, compared to just $3.5 billion in 2017, according to Viridian Capital Advisors. Grand View Research estimates that the combined recreational and medical marijuana market will reach $146 billion in 2025, up from $9.3 billion in 2016.
The surge in funding and optimism follow a wave of legalizations: In 2018, Utah and Minnesota joined 32 other states in approving medical marijuana, and Michigan became the tenth state, along with Washington, D.C., to legalize pot for recreational use. Last month, Congress passed a farm bill that legalized hemp, a cannabis plant with very low levels of THC.
Some 66 percent of Americans support legalizing marijuana, including more than half of Republicans, according to Gallup. Many prominent politicians have called for the decriminalization of marijuana at the federal level.