Cannabis has been designated as an ‘essential’ in most US states where it is legal, and this has served as a favorable tailwind for the industry. The cannabis industry is a relatively new area of investment, which presents a plethora of opportunities for so many willing and daring investors.
The marijuana industry consists of businesses that support or are involved in the research, development, distribution, and sale of medical and recreational marijuana. Therefore, this article explores three ways to invest in the ever-growing cannabis business industry.
Invest in a publicly-traded cannabis company
Since the cannabis business industry is relatively new, many publicly traded stocks can be purchased without a huge investment, making it simple to dip your toe in the water and see if it works for you. You can think of buying stocks in the U.S cannabis, and cannabis ETFs through exchanges such as:
- NASDAQ (National Association of Securities Dealers Automated Quotations).
- (TSX) Toronto Stock Exchange.
- NYSE (New York Stock Exchange).
- TSX (Toronto Stock Exchange).
- OTC (Over the Counter Stocks).
According to businesswire.com, the following are the best marijuana stocks in 2021.
- Green Thumb Industries (OTC: GTBIF) – marijuana grower and retailer.
- Innovative industrial properties – ancillary provider.
- Grow Generation (NASDAQ: GRWG) – ancillary provider.
- Scotts Miracle-Gro (NYSE: SMG) – ancillary provider.
- Jazz Pharmaceuticals (NASDAQ: JAZZ) – biotech.
Invest in ancillary businesses that support cannabis
Ancillary marijuana firms are growing as the sector blooms as more states legalize marijuana for recreational and medicinal use. However, it is worth noting that ancillary industries do not involve themselves in the plant directly; instead, they focus on providing services such as software development, supply chain, and packaging. Investing in an ancillary business that supports cannabis is the best option for you if you are cautious about new, semi-regulated sectors.
Ancillary service providers offer the following services.
- Packaging and Labeling Companies.
- Delivery services.
- Secure transport businesses.
- Security companies.
- Media networks.
- Retail design firms.
- Nutrient suppliers.
- Extraction equipment.
Ancillary service providers face many challenges, for instance, in advertising their services. However, firms such as 420 Property have exclusive advertising opportunities for ancillary service providers in cannabis, hemp appraisal, and architecture design. This firm is among the world’s largest cannabis and hemp real estate marketplace. It is primarily the source of cannabis real estate and business listings, financing, insurance, and professional services.
Invest in private equity in a cannabis brand
Many businesses have sound, long-term business models that can be scaled up. All of these represent the cannabis private equity opportunity.
Regulations vary significantly due to the patchwork system of legalization that currently exists on a national and global scale. In some cases, only residents are permitted to own property. International ownership is more than acceptable in other cases. Moreover, these rules are regularly changing.
How do you go about the investment?
Ensure the ownership laws are for cannabis licenses and businesses where you intend to invest
Check to see if outside investors are permitted and what requirements they must meet. For example, look into liquidity, income, and background checks. If you are familiar with particular brands you want to invest in, you must consider discussing this with a managing partner on purchase and investment opportunities.
Private cannabis companies have the final say on whether to accept your funds in exchange for equity
The advantage is that there is often the opportunity to acquire a larger share of the company than would be available in a stock exchange, often at a better price. However, there are risks associated with this; for instance, private companies are not required to divulge the same information as publicly traded companies. While smaller private companies typically have tremendous growth potential, they also face a more difficult road to profitability, resulting in more prolonged investment returns.
Marijuana is gaining popularity among investors, manufacturers, and researchers. Even though the plant is illegal under federal law, various states have legalized medical and recreational marijuana use. This has made robust growth, opening doors for various investment opportunities for daring investors. There are three key ways investors can invest in the marijuana industry, namely, in a publicly-traded cannabis company, in ancillary businesses that support cannabis, and in private equity in a cannabis brand.