- Cannabis-infused beverage startup Cann just closed a $27 million Series A funding round.
- Cofounder and CEO Jake Bullock told Insider why he moved to NYC to oversee the company’s expansion.
- Bullock’s move signals a growing focus on the East Coast as New York and other states legalize marijuana.
The cannabis industry is homing in on New York’s potentially $7 billion legal cannabis industry.
On Tuesday, cannabis-infused beverage startup Cann announced it had closed a $27 million Series A funding round, which included existing investors like Imaginary Ventures, along with celebrities like Rosario Dawson, Nina Dobrev, and Adam Devine.
Jake Bullock, the 33-year-old cofounder, told Insider he’s moving from California to New York to oversee the company’s expansion in the burgeoning region.
He said in an interview his goal is to have Cann’s beverages — which contain a low dose of THC and CBD in flavors like Grapefruit Rosemary and Lemon Lavender — on dispensary shelves the day sales begin in New York, Connecticut, and New Jersey. Cann started selling products in Massachusetts last year.
Bullock says the cannabis epicenter is shifting from LA to NYC
Bullock started Cann with Luke Anderson in Los Angeles in 2018. Back then, California was the epicenter of the cannabis industry — but now, that energy is starting to shift East.
“We launched the business on the west side of LA because there’s so much cannabis history in California,” Bullock said. “New York was sort of the last big cultural center that was holding out.”
New York legalized cannabis last year, though lawmakers are still working on regulations to allow cannabis sales in the state. Sales aren’t expected to begin until 2023, as Insider has reported, but many companies are laying the groundwork already.
Bullock says he started spending more time in the city in September and is now making the full-time switch, spurred by a number of employees who decided to move to the city from California during the pandemic.
While Cann still has senior executives in LA, Bullock says he sees value in working with his employees in New York City.
“That’s where this energy’s going to be for at least the next two years,” Bullock said. “The best consumer brands in our eyes are ones that are successful in LA and New York.”
Cannabis companies are all strategizing about how to enter New York and other potentially lucrative East Coast markets. Already, companies are competing over licenses to grow and sell cannabis in New York, spurring a flurry of M&A. Earlier this month, cannabis company Verano announced it was buying New York-based Goodness Growth Holdings in a $413 million all-share deal. And last year, Ascend Wellness Holdings reached an agreement to buy MedMen’s New York license, though it’s now the subject of a legal battle between the two companies that may end up in court.
The Northeast, according to Bullock, offers a different kind of consumer base from the West Coast. For Cann, it means customers who are perhaps more used to social drinking than smoking and so more likely to embrace the idea of a cannabis beverage.
He added that Cann has to change how it markets its products based on which coast it’s on. In California, Bullock said Cann had to focus on “untraining” people who normally would shy away from edibles or other cannabis products because they’ve had bad experiences. On the East Coast, it’s more about educating consumers who may be experiencing cannabis for the first time — which is why Cann only offers lower-dose products that can serve as an entry point, Bullock said.
Even though cannabis isn’t yet federally legal, Bullock says startups like Cann have an opportunity to expand and gain a consumer base before big corporations monopolize the industry.
“We have this window where the natural owners of these businesses — big alcohol, soft drinks, etc. — can’t really play in the US in the way that they may want because of restrictions,” Bullock said. “That gives us a window to really do that work with consumers in advance.”