Speaker Spotlight: Matt Hawkins, Founder & Managing Principal, Entourage Effect Capital
Interviewed by Jen Coleman, CEO of My Elevated Experience
Q: Could you please offer a brief overview of Entourage Effect Capital for those who may not be familiar, and share the inspiration behind its establishment?
Entourage Effect Capital (formerly Cresco Capital Partners) is an investment firm dedicated to the cannabis industry. EEC’s mission is to actively leverage our sector and investment experience, networks, and investment process to identify, invest in, and accelerate high quality companies. We stand out by taking an active role in adding value to the management teams of our companies. Some call this “Keiretsu”, but as we are in cannabis, we call it the “Entourage Effect.” The Entourage Effect refers to the synergistic combination of multiple compounds that elicit a stronger and more effective response from the use of the cannabis plant. At EEC, we aim to bring together the diverse backgrounds, cultures, strengths, networks, and expertise of our team, LPs, and portfolio companies to create significant advantages for all participants. The company was established after I facilitated individual cannabis real estate deals and saw an opportunity to raise capital around a dedicated fund. As with most cannabis industry stakeholders, the opportunity to drive important social impact was another draw to get further involved.
Q: Entourage Effect Capital was established in 2014 with a focus on positioning companies for growth in anticipation of federal legalization. Can you tell us a little bit about your investment philosophy and how you help position companies?
One of our philosophies is to invest an amount of capital that moves the needle for a company. That philosophy has followed the arc of the industry as it has matured over the past decade. Initially, we made seed investments in early-stage companies. In our third and most recent fund, we are primarily making growth investments. Outside of allocating capital, and as I alluded to earlier, we allocate a great deal of our time to our companies. We guide them through the many obstacles that the highly regulated cannabis industry presents. Efficient resource allocation positions our companies to scale to an extent and in a manner that enables them to be competitive in a post-legalization environment.
Q: I understand that at Entourage, you utilize platforms to stay ahead of emerging industry trends. Can you offer some guidance on your perspective regarding where the market is headed in the next 5 to 10 years?
The future of the cannabis industry is notoriously difficult to predict, especially with regards to a specific timeline. One of several reasons is that the treatment of cannabis is largely devoid from reasoned discussion and more focused on political posturing, especially at the federal level. Factors such as these make us hesitant to predict legislative developments. What I will say, however, is that we strongly believe federal legalization is a matter of ‘when, not if’. Until then, states will continue to drive the industry forward in terms of expanding addressable market and improving operating landscapes and, hopefully, be supported by federal agencies that are governed by science and not politics.
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