13: Inside Cannabis Private Equity: Scalable Models, Smart Terms, and Investor Strategy

Written By Bruce Eckfeldt
Jordan Youkilis

Inside Cannabis Private Equity: Scalable Models, Smart Terms, and Investor Strategy

Jordan Youkilis, founding partner at Key Investment Partners, joins Bruce Eckfeldt to shed light on the often misunderstood world of cannabis investing. With a background in finance and private equity, Jordan transitioned into cannabis investing after identifying a compelling market inefficiency: a rapidly growing industry starved for capital due to federal illegality and institutional risk aversion.

Jordan details the founding of Key Investment Partners, a firm that has now deployed over $50 million across 17 cannabis investments. He explains their strategic evolution—from a growth-oriented first fund to a cash-flow-focused second fund—capitalizing on tighter markets and better deal terms. For cannabis ventures, profitability and tax-aware operations are crucial due to the burden of Section 280E of the IRS code.

He breaks down their four-phase due diligence process and the criteria they use to evaluate deals, such as scalable models, strong management, and positive cash flow. On the sourcing side, Jordan outlines how capital constraints affect fundraising, emphasizing that most investment still comes from family offices and high-net-worth individuals.

Jordan also shares actionable advice for founders: start raising capital 12–18 months in advance, maintain lean operations, and understand your investor’s position in their fund cycle. He recommends trade shows, networking, and reading key resources like “Venture Deals” and “Zero to One” to deepen understanding of capital dynamics. The episode is a valuable guide for any founder navigating investment strategies in emerging or regulated markets.

Key Takeaways

  • Profitable, cash-flow-positive cannabis businesses attract more investor interest than high-growth, unprofitable ones

  • Capital scarcity in cannabis allows investors to negotiate better terms and lower valuations

  • Section 280E taxes heavily penalize cannabis businesses, affecting valuation and deal viability

  • Strong due diligence processes and institutional-grade practices enhance investor confidence

  • Founders must plan capital raises 12–18 months in advance, especially in tight funding markets

  • Misjudging market cycles and over-raising can lead to damaging down rounds

  • Understanding investor fund cycles helps founders better tailor pitches and timing

  • Warm introductions and strategic networking greatly improve investment access

Contact Information:

Bruce Eckfeldt
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