INVESTING IN CANNABIS
Want to learn about cannabis investments? There are many paths to becoming a cannabis investor that don’t involve buying marijuana stocks or even investing in plant-touching businesses, such as a dispensary, cultivation, or manufacturing/ processing facility. One investment approach is to look into non-plant-touching companies or ancillary businesses. These entities make their market profits by supporting the growing cannabis sector through industry-targeted technologies, services, hardware, and other necessary materials. Regardless of what avenue you choose as an investor, the first step is understanding more about the highly regulated cannabis market and what types of opportunities exist for stakeholders.
- The legal cannabis industry is estimated to contribute $92 billion to the U.S. economy in 2021, a 30% increase over 2020.
- Projections suggest the total legal market for cannabis sales will reach $37 billion by 2024, which is a 184% increase from 2019.
Marijuana Business Daily
- A record $8.5 billion worth of M&A transactions closed in mid-November 2021, compared to approximately $3 billion last year and $3.7 billion in 2019.
- There were 306 M&A transactions were up more than threefold in 2021, with 306 transactions through mid-December, up from the 86 recorded for the same period of 2020.
Viridian Capital Advisors
CANNABIS INVESTMENT FIRMS
Cannabis investment groups connect industry investors with startup, early stage, and companies already in the market that are raising capital. These firms offer an opportunity for investors to gain equity in emerging companies and offer compatible options to align with the investor’s unique goals, values, and risk profile. Here are some investment groups to consider:
Arcview Group: The Arcview Group is a vertically integrated company servicing the cannabis and hemp industry, built with social justice and responsibility at its core. An investment and market research platform, Arcview finances cannabis-related businesses and provides a broad spectrum of programs and services for investors, companies, entrepreneurs, and the greater cannabis community.
Green Growth Investments: Green Growth Investments is a cannabis private equity fund focused on identifying promising opportunities within the evolving legal cannabis industry and offering them to qualified individuals and entities. The firm matches qualified investors with licensed cannabis business opportunities in multiple states and conducts legal, financial and operational due diligence to ensure completion of investment or acquisition transactions.
Tuatara Capital: Headquartered in New York, Tuatara Capital has built a diverse portfolio of market leading cannabis businesses that can navigate and adapt to the industry’s rapidly evolving regulatory environment. Tuatara takes an active role in working together with each portfolio company through board representation, providing oversight and resources to deliver long-term value to all stakeholders. Tuatara’s current investment focus includes the following sub-sectors: research and testing, cultivation, processing, consumer and retail, technology, and industrial services.
Viridian Capital Advisors: One of the earliest financial and strategic advisory firms in the cannabis sector, Viridian Capital Advisors has a team of seasoned investment bankers and analysts who bring capital raise, M&A, and advisory transaction experience to the cannabis industry. To date, the firm has closed approximately $250 million in financings and over $650 million in M&A transactions.
Since marijuana is still federally illegal the Nasdaq, NYSE, and other stock exchanges overseen by federal agencies can only list public ancillary companies. Plant-touching cannabis stocks are currently only available on Canadian exchanges. Here are several cannabis stocks to consider:
Curaleaf Holdings, Inc. (CURA): Headquartered in Massachusetts, this firm trades on the Canadian Securities Exchange. Curaleaf runs dispensaries and production facilities across 23 states and with a CAD$10.3 billion market cap, it is one of largest industry players in North America.
Greenlane Holdings (GNLN): The global company distributes cannabis smoking accessories including vaporizers and has its own e-commerce brand channels. These products exist outside of federal drug paraphernalia laws since most can be used for tobacco as well as cannabis.
Scott’s Miracle Gro (SMG): An iconic lawn care and garden brand, Scotts also works within the cannabis space by providing agricultural services and products to marijuana cultivators.
Anheuser-Busch InBev (BUD): The multinational beverage and brewing company and world’s largest brewer is now developing marijuana-infused drinks through its partner Tilray, a Canadian pharmaceutical and cannabis company.
GW Pharmaceuticals (GWPH): Focused on cannabinoid-based medicines, GW Pharmaceuticals gained mainstream attention as the first biotech company to receive U.S. approval for its cannabis-derived seizure treatment Epidolex and is developing other therapies using plant cannabinoids.
Innovative Industrial Properties (IIPR): This Real Estate Investment Trust (REIT) invests in commercial real estate facilities that support cannabis cultivation, manufacturing, and distribution. REITs are a desirable option for those who already invest in real estate and may want to broaden their portfolio.
WHERE TO START INVESTING IN CANNABIS
The first step to investing in cannabis is deciding how much you are willing to invest. If your available capital is below $50,000, you may want to start by diversifying your stock portfolio with publicly traded cannabis businesses. If your capabilities extend further, then it is advised to work with an investment firm that specializes in cannabis to see what opportunities are available that meet your capital requirements.
PLANT-TOUCHING VS. ANCILLARY CANNABIS INVESTMENTS
If you’re ready to make a significant investment into the cannabis space, you must first decide whether or not you want to pursue plant-touching opportunities, such as investing in a licensed cannabis dispensary, manufacturing, cultivation, or distribution operation. Due to federal prohibition, these investments can be more of a risk and you may opt to look into ancillary businesses. These organizations do not work directly with the cannabis plant or plant by products and instead offer services or supplies to support the industry.
SECTOR FOCUS CANNABIS INVESTMENTS
What makes the cannabis industry so attractive is it touches a variety of sectors, from financial technology and biotech to commercial agriculture and brick and mortar retail. Take the time to research what market categories are on the rise or may offer the most potential. If you are considering investing in a plant-touching operation, you will want to consider what type of market, is it medical-only or adult-use? What types of license opportunities are available and to whom? Unlimited markets don’t have a cap on licenses, which might make them less competitive but also less valuable. Limited markets with a license cap will often require more capital investment.
GET STARTED INVESTING IN CANNABIS
RESEARCH & REPORTS
Visit the Arcview Group for the latest industry data and market research to start your cannabis investment journey. Their Monthly Playbook provides access to comprehensive reports that will help you make thoughtful investment decisions. The Arcview Group also hosts investment events and has a Women’s Inclusion Network to help bring more women into the industry forefront.
Interested in learning more about plant-touching cannabis operations? Visit How to Open a Dispensary, to enroll in online educational courses on business and application planning, cannabis real estate, corporate structure and team building.
How to Open a Dispensary is powered by The Cannabis Business Advisors, a national cannabis business consulting firm with over 30 years combined industry experience across 17 state markets. We created How to Open a Dispensary to help new cannabis entrepreneurs break into the industry through innovative DIY tools and courses.
The CB Advisors can connect potential investors with investment groups, partners, and seed, early-stage, and high-growth cannabis companies looking to expand. Their team of industry experts can offer potential cannabis business entrepreneurs a comprehensive overview of the business landscape, identify how to effectively evaluate prospective opportunities, and help you understand how you to make money on this emerging industry.
Email firstname.lastname@example.org or call 602-290-9424 to set up an appointment today.