While venture capitalists (VCs) are always eyeing the next promising startup in the market, they’re turning a blind eye to three of the most stigmatized industries — cannabis, sex tech, and psychedelics. Are they missing out, or should they steer clear of these “vice clauses?” But what is a vice clause?
Some people have always thought that sex and psychedelics might be an interesting tandem. But not in the eyes of the public. In addition, cannabis has also received a bad rap for polluting the minds of the younger generation. Society against marijuana has labeled this omnipotent plant as a gateway drug. Each of these industries has a promising outlook for investors and business owners. But due to the stigma implied on each, VCs aren’t looking in those directions.
Herbal medicine vs. psychotic drug
While only a few cannabis enthusiasts believe that weed is a harbinger of all things great for the human body, many have denounced its adverse effects on teenagers and adults who are chronic users of the said plant. The primary debate in question was always due to the psychoactive elements in cannabis. It creates that red-eye effect and psychosis in weed smokers.
But isn’t cannabis comparable to coffee or wine? Isn’t a plant considered something organic? Emily Paxhia, the managing director of a cannabis-centric hedge fund called Poseidon Asset Management, rules in favor of cannabis. She claims that marijuana-related products are known to be supplementary to people’s wellness. Paxhia says that cannabis shouldn’t be categorized as a “vice” nor a “sin.”
She expressed her argument on Twitter hosted by TechCrunch early this week to show the most recent cannabis investor survey in the United States.
Investors are avoiding the stigma
The terms “vice clause” and “sin clause” classify niches or products that investors prevent putting their money into. These business categories include porn, gambling, alcohol, and tobacco.
However, Paxhia found out that investors deviate from investing in these business categories due to the lack of the fund’s limited partners. She says that it’s common knowledge that investors stay away from these types of investments. It’s because they don’t want to be labeled with the same stigma these niches are in.
An O.School founder, Andrea Barrica, said, “I don’t identify with the word ‘vice’ at all.” She runs a sexual wellness media platform and considers cannabis and sex tech as having an impact that entrepreneurs are hoping to achieve. She also claims that the term “wellness” has been thrown into this pool, making sex tech and cannabis more “palatable.”
Investors could use a little cannabis
Supporters of the cannabis industry are also reminding people that marijuana and marijuana-related products aren’t sold and used for a recreational high only. People, especially in Europe, rely on medical cannabis for health benefits.
Moreover, psychedelics are also another category in the wellness department. Entrepreneurs have also relied on psychedelics in their personal lives, especially after a stressful work day or those suffering from work burnout or depression.
Paxhia implies that those willing to put money into cannabis, sex tech, and psychedelics are already prominent and wealthy investors. She says that fiduciaries are also missing out on the lucrative returns from these business categories.
So, will investors start looking at the positive monetary impact of these three business classifications? We’ll have to wait until the already wealthy investors are burning money into these “vice clause” categories.
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