Beverly Hills real estate firm Starpoint Properties said it plans to invest $100 million in California marijuana companies over the next 12 months. The news catapults Starpoint CEO Paul Daneshrad, a figure previously unknown in the industry, into the first tier of cannabis investors nationwide.
Daneshrad’s announcement, and a similar pledge out of Florida this week, come as the industry is both expanding and trying to keep off the radar of weed-hating U.S. Attorney General Jeff Sessions.
Daneshrad said he’s not especially worried about the legal situation. While medical and recreational weed remain federally illegal, in a few years, he said, medical marijuana will be available in 35 or 40 states. “Trump and Sessions are going to come in and say, ‘OK, 40 states, we don't agree with what you and your citizens want. No, you gotta listen to us’? I don't see that happening,” Daneshrad said.
If anything, Daneshrad sees the chilling effect Sessions has had on the market as tilting the field in his favor. "If you're Goldman Sachs, or GE or Procter & Gamble, you can't play, which we don't mind,” he said. “I don't mind barriers in the marketplace. It keeps some of the competition out."
Daneshrad started his real estate company, Starpoint Properties, about 30 years ago in his sister’s garage. It has since grown into a $1 billion portfolio of apartments and commercial space. His vehicle for cannabis investing, Stargreen Capital, is a subsidiary of the original business, drawing on the same assets, investors and expertise.
Alongside Privateer Holdings in Seattle, Stargreen is one of a handful of U.S. companies that can credibly claim to be investing tens of millions of dollars in legal weed.
"We're unique from the standpoint that our capital is raised and in place,” Daneshrad said in his penthouse office, near an enormous sneaker that once belonged to Shaq. “We're a 30-year-old firm. It's not like we're entering the market de novo."
The firm is looking to invest up to $15 million in companies that "have a mindset to really get aggressive and capture market share," Daneshrad said. "Our deployment of capital will be quick and swift. We just need to find the opportunities."
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These companies may be growers, manufacturers or dispensaries, but Daneshrad is particularly interested in startups with appealing brands that can produce consistent products. Both of these are challenges in the cannabis industry, where there are heavy restrictions on advertising and much about the raw material remains unstudied. As the market expands, he's also interested in cultivators capable of keeping their costs down, since it’s “going to get very, very competitive very quickly.”
In addition to capital, Daneshrad said the company has 1 million square feet of space in Lancaster that companies may be able to use for growing space or factories. (A 500,000-square-foot grow would be among the largest in California.)
While many cannabis entrepreneurs are quick to align themselves with weed’s real and potential medical benefits, Daneshrad doesn’t dwell on what he calls the “Ph.D. side of the business,” saying, “We'll worry about the science and technology of the business as it gets a little more mature.”
Also this week, a wealthy Florida personal injury lawyer and cannabis activist, John Morgan, said he was “prepared” to invest $100 million in the industry. Evidently, Sessions doesn’t have everyone scared.