Meet the brother-and-sister team behind one of the first cannabis-focused hedge funds

Courtesy of Poseidon Asset Management, Emily Paxhia

When Morgan and Emily Paxhia lost their father to cancer in 1996, the world was a different place.

"It was a rough end-of-life, as with any cancer," Emily told Business Insider over the phone. Their father was taking a "litany of medications" simply to remain comfortable. 

A hospice nurse quietly took Morgan and Emily aside and told them that their father should try smoking pot to ease some of his symptoms. 

While their father decided not to use marijuana due to the stigma — this was upstate New York in the 1990's — the nurse's suggestion put the special qualities of the plant into both Emily and Morgan's minds. 

In fact, the experience ended up compelling them to jump into the marijuana space both as investors and advocates. In 2013, the brother-and-sister team started Poseidon Asset Management, based in California, as one of the first legal cannabis-focused hedge funds. 

Three years later, the firm has grown to a portfolio of 27 companies, up form just 11 in 2014, with many more deals in the pipeline. Poseidon has made investments in a number of well-known companies operating in the legal marijuana industry, including Baker, a company that helps dispensaries optimize growth, and Tradiv, a cannabis analytics company. Morgan and Emily, however, are still the only employees. 

Though Poseidon is a relatively new firm, the Paxhias have a "long and winding history with cannabis," Emily said. 

In 2010, Emily moved to California where she started to notice the beginnings of the marijuana boom, such as the first medical marijuana dispensaries and early branded edibles. 

"Morgan and I started talking about it," Emily said. "Because who else can you really talk to but your family when you're thinking about crazy things?" 

Courtesy of Poseidon Asset Management, Emily Paxhia

Morgan, who Emily describes as a "brilliant economist," said that their interest in the marijuana came in two parts. First, they saw a clear opportunity to make money. Second, they truly wanted to spread knowledge about cannabis from a health, wellness, and environmental standpoint.

"It was a question of how many times in life can you look at an opportunity that really has a triple-bottom-line impact to yourself and to the world?" Morgan explained. "That's what resonated so strongly."

One of Poseidon's main goals — besides generating solid returns, although they declined to comment on specifics — is to espouse the benefits of marijuana and increase fair and open access for those who would otherwise turn to painkillers like opioids. Due to their backgrounds, the duo decided to start a fund, rather than a consumer-focused company, Morgan explained. 

Emily is a former consultant who's done work with American Express, and Morgan comes from a more traditional finance background, having worked on UBS's fixed-income desk as well as at private investment firms.

"We had two very unique skill-sets at a very unique point in time," Morgan said.

"The fact that we are siblings, is actually critical to the fact that we've been able to do this," Emily added. "Because you have to trust your partner implicitly without question about their motives and their intentions." 

Courtesy of Poseidon Asset Management, Emily Paxhia

With his banking experience, Morgan is responsible for developing and implementing the firm's investment strategies, as well as performing the due diligence necessary for smart decision-making.

Emily, with her consulting background, serves as the point-person for negotiations and monitoring the performance of portfolio companies, as well as maintaining relationships within the larger cannabis industry for future deals.

Because the rules can vary state-by-state, engaging in a marijuana-focused business requires some risk. Trust in your business partner is crucial.

And while Emily is the older of the two, she flat-out rejected my question about whether that gives her license to boss her little brother around at work. It's often actually harder on the rest of their family, because cannabis "dominates the conversation," she said, at every family gathering.

Both Morgan and Emily agreed that their company and plans would make their parents happy.

"They were both entrepreneurs," Emily said. "And for them to see us doing something we are absolutely passionate about, and doing it our way, would also make them very proud."

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