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KPBS Midday Edition

San Diego Investors Hope To Jump Start Pot Businesses

An eighth of an ounce of marijuana is held in the palm of a hand, Nov. 6, 2015.
Katie Schoolov
An eighth of an ounce of marijuana is held in the palm of a hand, Nov. 6, 2015.

San Diego Investors Hope To Jump Start Pot Businesses
San Diego Investors Hope To Jump Start Pot Businesses GUEST: Eric Gomez, CEO, Canopy San Diego

This is KPBS Midday Edition I'm Maureen Cavanaugh Members of the San Diego city Council seem to think a marijuana proposition this November is like. They are considered -- is likely. They are considering asking taxpayers for a yes vote on pot. A startup accelerator is being funded for people with technology ideas to assist state marijuana businesses. They give them cash and mentoring for their ideas and in turn they own a percentage of the company. Several companies like Airbnb and Dropbox got a boost from accelerators this is the first in California for a pot business. I am joined with Eric Gomez who is CEO of Canopy San Diego. Welcome to the program. Thanks for helping me -- having me. You don't want to be dealing with anyone delivering marijuana, why not? It is hard to understand where that side of the business will go and it is highly regulated. One profitable business debate may be illegal tomorrow or its profit may be regulated away from them. Give me examples of the types of companies you are looking for in support of the legal marijuana business. In a nutshell, we are looking to build business infrastructure companies., And businesses take it take -- take for granted that you can get a payroll service. In the cannabis business, that a big deal. We are looking for inventory software control, payroll, Internet social media platforms, data and analytics companies. We are looking for Grove -- Grow tech. And we're looking at health and education platforms. The medicinal side of this industry is the most encouraging. Anything that place within that sector is valuable to us as well. I was surprised to learn that even without recreational marijuana being legal, just medical marijuana in California makes is the largest legal pot center in the country. That is correct depending on what data you look at. We are in one of the biggest markets in the world regardless of which industry it with -- of which industry it is. We own over 60% of the medicinal market today. How does this start? We take roughly one out of 10 companies that apply to us. They have to have a strong founding team and a passionate leader and a solution to the problem. Reporter: What happens to them when they are in the accelerator? They will go through a 16 week period of a structured program. We will have mentors coming in and we will have networking events where they can become part of the community and get their questions answered. Whether it's a marketing, finance, or cannabis question we will have a group of mentors available to them. We will have a few milestones throughout the program. We will have a pitch event where we will invite the company to see the companies that have gone through the accelerator. What kind of return do they get? That's the million-dollar question. Most investors understand you have to invest in a certain number of companies because not all will survive. We are putting 40 companies through this accelerator because we understand just putting 10 would not be enough. But we do hope to be the data, if you will, the previous results because of the mentorship program we are doing. We hope to take good idea to make them even better whereas a similar company without receiving the same mentorship may or may not be that successful. This is the first cannabis startup accelerator industry in Southern California. But there have been others. We are are they and how they worked out? -- Where are they and how have they worked out? This business is exploding. When I made investments in this industry initially I had to go to Colorado to find them. I asked what they were doing in California and they said nothing. I then asked why don't we partner together. Since then, there have been investment vehicles pop up around the country. None of been structured the way we have. This is where people need to look carefully at what an accelerator and incubator is made up. We are the first to do it in Southern California. There are a few more in creating in northern California and California. Thank you for talking to me, Eric Gomez, CEO, Canopy San Diego. Thanks for having me.

A new San Diego accelerator wants to give marijuana-related businesses a leg up.

Startup accelerators typically take very early companies, perhaps just a founder and an idea, and help them grow by giving them mentors and a chance to meet investors. Some of the biggest accelerators have helped companies like Airbnb and Dropbox.

Canopy San Diego, the first marijuana accelerator in Southern California, plans to give a group of 10 new companies some seed money, office space and mentorship for 16 weeks. In exchange, Canopy and its investors will get a percentage of the companies' equity.

Canopy CEO Eric Gomez said he won't be accepting applications from companies that sell or grow marijuana, but wants to boost companies with products that could help growers or dispensaries. Many companies won't do business with the pot industry, leaving a niche for banking, water and data analytics products tailored to marijuana businesses, he said.

"Businesses take for granted that they can go out and get a bank account or marketing firm," Gomez said on KPBS Midday Edition Wednesday. "In the cannabis industry that's very hard to do."

Gomez said he's looking for startups with a strong team of founders who have technical knowledge of the industry and a solution to a problem.