Episode Summary: Jacqueline Bennett — Highlands Venture Partners

Podcast: The Investor With Joel Palathinkal
Host: Dr. Joel Palathinkal
Guest: Jacqueline Bennett, Co-founder of Highlands Venture Partners
Recorded: September 12, 2025

Overview

In this episode, Dr. Joel Palathinkal welcomes Jacqueline Bennett, co-founder of Highlands Venture Partners, to discuss her journey from Australia to Wall Street and into the rapidly evolving cannabis investment ecosystem. The conversation unpacks the nuances of investing in cannabis, from regulatory hurdles and financial innovation (SPACs) to the future of cannabis brands, biotechnology, and the role institutional investors and emerging managers play in this dynamic sector. Jacqueline offers candid insights into the challenges and opportunities as the U.S. inches closer to federal legalization and wider institutional acceptance.

Jacqueline Bennett’s Background & Journey into Venture (01:16–08:01)

• Australian Roots:
  Raised in Perth, undergrad at University of Western Australia; early career in merchant banking at Babcock and Brown during the financial crisis.
• Operator Experience:
  Moved to San Francisco; worked in finance and strategy at Viator, a venture-backed travel tech firm, experiencing high growth and an eventual acquisition by TripAdvisor.
• Institutional & Wall Street Experience:
  Business school at NYU (2011–13), six years on Wall Street (Credit Suisse and JP Morgan); co-founded JP Morgan’s Disruptive Commerce team, covering tech-driven consumer and retail companies (e.g., Dollar Shave Club, Peloton, sweetgreen).
• Entry into Cannabis:
  First exposure in 2018 while brokering deals involving Canadian LPs. Inspired by the industry's complexity and growth potential, she transitioned into venture investing, co-founding Highlands Venture Partners with Tahira Rehmatullah—highlighting their complementary skillsets.

Quote:

“I grew up in Australia...I did my undergrad in Perth...then moved to Sydney, spent my early career at Babcock and Brown, which failed dramatically during the financial crisis. That was a good experience at the tender age of early 20s, where I didn’t have a lot at risk but certainly lessons that I’ve taken with me throughout my career.”
—Jacqueline Bennett (01:18)

Switching Hats: Operator vs. Investor, and the Culture of Big Firms (08:30–13:27)

Wearing Multiple Hats

• Jacqueline found the transition from dealmaker to operator natural due to her hands-on and growth-oriented mindset but noted the monotony of a narrow focus over time.

Carlyle vs. Traditional VC

• Contrasts the structure and culture at “big brand” firms like Carlyle—thorough, process-heavy, very formal, frequent meetings (“monthly, which is quite a lot”)—with the nimbler, risk-tolerant VC ethos.

Pros and Cons of Institutional Backing

• Brand brings credibility but can foster complacency:

  “People really depend on their business card. They're like, ‘oh, we'll win the business just because we're JP Morgan, not because we're coming up with the most creative idea.’”
  —Jacqueline Bennett (13:58)

SPACs: Evolution, Advantages, and Pitfalls in Cannabis (16:16–24:07)

• What’s a SPAC?
  Special Purpose Acquisition Companies surged in two major waves (2011 and 2017); popularized more recently by high-profile investors like Chamath Palihapitiya.

• Use in Cannabis:
  Cannabis companies, lacking traditional banking access, used Canadian exchanges and SPACs for capital. Cannabis SPACs differ from “distressed asset” SPACs in mainstream sectors.

• Risks and Nuances:
  Becoming a public company brings scrutiny; SPAC as a fund vehicle is attractive for its speed but less for long-term focus.

  “I push back on it [using SPACs as a fund]...there’s too much volatility and so many other variables. It takes you away from actually the portfolio companies and the effectiveness of the fund.”
  —Jacqueline Bennett (22:50)

SPAC Mechanics Clarified:

• The “de-spac” process is when the empty shell merges with the target company, giving it a public listing.
• Noted recent trend of SPACs merging multiple companies at the De-SPAC event (e.g., AYR Strategies).

Cannabis Ecosystem Deep Dive (25:21–52:30)

Regulatory Complexity Drives Everything

• Federal illegality blocks national banks, leaving community banks, cash-dependency, and expensive compliance workarounds (armored trucks, etc.).
• Each state has its own regulations, licensing processes, and even municipalities can “opt out,” adding bewildering granularity.
• Pending legislation (Safe Banking Act) could finally allow major banks and card processors to participate.

Quote:

“If you haven’t been operating in the industry and want to start, go meet someone who has and have them participate with you at the beginning...I have been shocked by this industry so many times. It’s just the complexities are so...rampant and surprising.”
—Jacqueline Bennett (32:27)

Current Regulatory Stats:

• 36–37 states legalized medical use; 14 + DC legal for adult use.
• Biden administration seen as highly favorable for further progress.

Investment Landscape & Pillars
Highlands Venture Partners identifies three pillars:

1. Biotech: Rapid innovation around nanotechnology for ingredient formulation—e.g., water-soluble cannabinoids for accurate dosing, flavor control. Investment focus due to scalability and cross-industry potential.
   • Quote: “I’ve developed a near obsession with biotechnology in the last 12 months. It’s fascinating for many reasons.” (06:20)
2. Consumer Brands: Brand-building challenges remain due to advertising restrictions, pricing pressures, need for product consistency.
3. CBD/Tech: Market volatility and major pricing swings in wholesale commodities (CBD plummeted in 2020).

Vertical Integration:

• Some states mandate it, meaning operations must own cultivation, processing, and retail end-to-end. Not scalable for all, and will likely give way to horizontal specialization as the industry matures.

Big Company Interest and Risks for Founders

• Alcohol and food giants (Constellation, AB InBev, Nestle, etc.) have made forays, but real entry is expected after federal legalization, which could upend current players.

“We’re very strict on active investing...there’s too many changes happening all at once in this industry.... When federal legalization happens, there will be floodgates. The capital will come in very, very quickly.”
—Jacqueline Bennett (44:13)

Product and R&D Innovations

• Biosynthesis: Lab-grown cannabinoids, analogous to lab-grown meat, offer consistent, scalable production for medical and consumer markets.
• Nanotechnology in edibles solves for taste, consistency, onset/offset effects—key for mass adoption, especially if acquired by CPG (consumer packaged goods) giants in the future.

Challenges: Black Market, Tax, and Future Outlook (59:23–61:37)

Black Market Competition:

• Still the main competitor to legal brands due to persistent high taxes and cumbersome regulations (e.g., IRS code 280E, taxing cannabis firms at gross profit vs. net).

Quote:

“If you ask a cannabis brand who their greatest competitor is, they won’t comment on other brands—they’ll say the black market.”
—Jacqueline Bennett (60:14)

Tax Challenges:

• The federal tax code (280E) is a significant deterrent, often making legal operations less profitable than illegal counterparts.

Final Q&A Highlights (61:55–64:22)

• Can governments hold back innovation and social goods?
  Jacqueline emphasizes that outcomes depend on political will, societal pressure, and the economic climate. Once public sentiment becomes overwhelming, regulatory resistance fades.

Quote:

“If the population is supportive and there's enough momentum...the sentiment is just beyond [the government's] ability to stop it.”
—Jacqueline Bennett (63:21)

Notable Quotes & Timestamps

• On Institutional Mindset:
  “People really depend on their business card...not because we’re coming up with the most creative idea.” (13:58)
• On Complexity:
  “I have been shocked by this industry so many times. The complexities are so rampant and surprising.” (32:27)
• On Nanotechnology:
  “They encapsulate the particles...it enables them to control for things like flavor release, how it interacts with the body. But flavor is a big one.” (56:09)
• On Women and Cannabis Research:
  “For the women on the line...the female reproductive system has the most endocannabinoid receptors...There's a lot of really exciting...discoveries for the lifecycle of a woman.” (51:38)

Key Takeaways

• The cannabis industry’s complexity—regulation, finance, and operations—demands expertise, adaptability, and active investing.
• SPACs are a useful, but not always optimal, tool for cannabis companies seeking capital.
• The U.S. market is poised for massive capital influx and disruption following federal legalization.
• Biotech, especially better ingredient delivery and consistency, is a critical next frontier and a major focus for Highlands Venture Partners.
• Black market competition and tax policy remain central hurdles for legal operators.
• There’s still a vast, untapped potential for product innovation, research, and cross-industry integration (e.g., beauty, pharma, CPG).

For aspiring investors and founders:
Be prepared for rapid change, regulatory whiplash, and the need for hands-on, creative problem-solving. The opportunity is huge, but so are the pitfalls—a domain for the “hungry,” not the complacent.