Friday June 30, 2017
Let’s face it, we’re all suckers for easy money – the opportunity to strike it rich off one carefully-placed bet has many eager to throw their hats into the ring, fully-expecting to be raking in the dough in a matter of time. And, though there are certainly some risks involved in marijuana investing, skepticism has been waning as profits keep growing.
A few years ago, cannabis reform was unpredictable, but the trend towards legalization has helped people learn about the benefits of cannabis therapy (and the detriment of the War on Drugs).
As it stands, more than half of the country has legalized cannabis for medical purposes, up from just 10 states only five years ago.
Of course, the growth of recreational cannabis has contributed to the appeal of cannabis investing, too, thanks to the birth of businesses like cannabis-related tours, resorts and activities. Cannabis tourism has become so popular in Colorado, in fact, that tourism rates have broken records for the past five years in a row. It seems cannabis businesses and investors have a lot to gain, and the earlier they get in, the more they stand to make. But before putting too much money into marijuana investments, it’s important to look at what we already know.
Things to Consider Before Investing in the Cannabis Industry
Legal marijuana is huge. Generating a whopping $6.7 billion in sales in 2016 (up 30 percent from 2015), the cannabis industry is breaking records as the fastest-growing industry in history, outpacing the cable television boom in the 1990’s with a 19 percent industry growth rate and broadband internet in the 2000’s with a 29 percent growth rate.
But not all businesses are created equal. Some may be more profitable than others, show more potential or otherwise prove to be less risky.
Because Attorney General Jeff Sessions is openly anti-cannabis, businesses that deal directly with cannabis products may be more vulnerable to federal intervention and prosecution.
This puts businesses like dispensaries, grow ops, concentrate producers and cannabis product manufacturers at a higher risk and thus less attractive to investors.
The businesses that are intriguing to investors are those that serve the cannabis community without touching the product. These ancillary companies help support the cannabis industry – and indeed are vital to its success – while remaining neutral in terms of federal law. Examples of ancillary businesses may include media companies, marketing agencies, consulting services, software, grow supplies or extraction equipment; basically any product or service can be adjusted to exclusively serve the cannabis industry, and it is those businesses that show the most potential with the least amount of risk.
Companies Specializing in Industry Investment
Investing in cannabis isn’t just a matter of rolling the dice and hoping for the best. There are calculated moves investors take to find the best businesses in the industry – those with the most potential for growth and financial gain with the least amount of risk – and they’re doing what it takes to invest in these opportunities then see them through to fruition.
One such company, Canopy Boulder, seeks out up-and-coming ancillary cannabis businesses that have a strong model, minimal to moderate traction and exponential growth potential, then provides both funding and support in exchange for a percentage of the company’s profit. Because Canopy is invested in each company they help fund, they work diligently to see that their companies launch – and function – successfully. Other companies specializing in cannabis investments include Gateway Incubator program, Salveo Capital, and the original cannabis investment group, Arcview Group.
Look to Cannabis Investment Companies to Find the Best Investments
So how do these investment companies help you, the investor, be successful in the industry? By doing the dirty work for you. They carefully vet new or young companies, offer the investment capital they need to take off, then support them until they do. These investors are well-educated in the world of start-up financing and know the qualities to look for (and which to turn away from), and all you have to do is follow their lead.
Most of these investment firms also offer public product or service demos to help you find and learn about companies of interest. By attending live demos (or researching them online), you can learn which companies investors are excited about before they get successful and their stock prices increase.
Trends in Cannabis Investing
There are thousands of cannabis business investment opportunities available today, either as over-the-counter (penny) stocks or those sold through the NASDAQ stock exchange, which can make the decision overwhelming to decide. Even enlisting the help of investment companies can prove difficult since they churn out fresh businesses quarterly. Fortunately, there are specific business areas you can focus on that seem to be showing the most promise overall.
For example, because medical marijuana is so much more popular than recreational marijuana, companies focused on medical cannabis products and services seem to be among the most favorable. Also of interest are grow supply companies who not only promote both commercial and private cannabis cultivation, but also promote the cultivation of organic foods in general – a trend that continues to grow in popularity among Americans.
Hemp companies are also a safe bet in terms of cannabis investing as hemp cultivation and distribution becomes legal across the states.
Not to mention the concentration of CBD found in hemp which helps it fit nicely into the medical market, as well.
The cannabis industry seems like an easy bet when it comes to investing, but the market is still volatile in many aspects. Nevertheless, cannabis investing may prove to be very lucrative if you put your money in the right places.
Do you have any tips for cannabis investing? We’d love to hear them.