The cannabis industry, just like other emerging sectors, has attracted many investors who hope to make a killing from the high returns of the untapped market. Some investors have had tremendous success investing in new sectors. However, always chasing the next big investment can cause investors to bet their resources on products and industries with no chance of success.
The cannabis industry has grown steadily in the past few years since several jurisdictions (some U.S states and Canada) have revised their laws concerning the sale and use of marijuana. At first, Canada legalized the use of marijuana for medicinal purposes. As Canada continues to revise these laws, it is possible that the recreational use of cannabis will be legalized soon. Cannabis companies, therefore, are promising investors of great returns should they venture into the cannabis industry.
All investments come with risks and the cannabis industry is no different. There are still a lot of uncertainties especially since laws are still evolving. The cannabis industry is expanding rapidly, and this has paved the way for new companies to come up with services, technologies, and products other than just the distribution and cultivation of cannabis.
The industry has led to the emergence of businesses operating under its umbrella. Some of these businesses include: Agriculture technology: these are businesses that facilitate the innovation and creation of equipment used to cultivate cannabis such as greenhouse technologies, enhanced lighting systems, and automated fertilizer systems.
Ancillary services and products: these businesses compliment the marijuana industry. They include insurance to cultivators and products such as a cannabis breathalyzer. Biotechnology: these are concerned with the pharmaceutical application of marijuana by creating treatments to target diseases and illnesses. Consulting services: these businesses take care of the complexity of regulations and rules surrounding cannabis.
Consumption devices: these develop products to help people consume cannabis. Cultivation and retail: they grow and sell marijuana. Cannabis products and extracts: they sell cannabidiol products, edibles, drinks, topicals, etc. Holding Companies: they own a significant number of voting shares in different cannabis companies. They have a say in the affairs and management of the companies. Industrial hemp: they offer goods using industrial hemp. Organic farms: they offer organically grown marijuana to other companies.
Here are the common risks:
Success is not guaranteed: there is no guarantee that your business will be profitable. There are still many rules that restrict the sale and distribution of cannabis and most businesses are counting on the future. Government regulation: there are countless rules and regulations concerning the advertising, branding and sale of cannabis.
They can hinder your success. Legal considerations: every jurisdiction has laws and regulations that cannabis companies must adhere to. If they change, the business must adjust too or even close. Pricing and taxation: state-mandated pricing and taxation on marijuana products may hinder your success. Inflated share prices: this is risky because the value of the investment may never increase. High operating cost: a commercial cannabis company requires a lot of money to start and operate.
Acquire Information Before You Invest
These are some of the things you must do before you start a cannabis business:
- Review disclosure documents
- Read official materials
- Talk to an advisor
- Do a lot of research
Many industries are slowly fading, but there is one that has continued to grow tremendously over the past few years—the marijuana industry. More states continue to legalize and tax each day. With the business booming there is a lot of money to be gained in the cannabis industry. The state of Colorado, for instance, reported $1+ billion in sales in just eight months.
It is not guaranteed that everyone who decides to sell cannabis is going to become rich instantly. However, there is plenty of marijuana money available. Experts in this industry, lucky for you, have some tips to help you make the best of this opportunity. Here is advice from the experts. President of SinglePoint, Wil Ralston: he says that the cannabis industry is perfect for making money. According to him, there are so many opportunities for entrepreneurship or offering ancillary business services such as web design and marketing.
Another way to make huge profits is by investing. Cannabis-eccentric companies offer a myriad of opportunities for investment. If you are keen you will notice that there are companies that are looking to be funded in the cannabis industry. COO of Marimed Inc. Timothy Shaw: he believes in creating a reputable brand identity; one that patients can always rely on for purity, precision dosage, and consistency.
A high-quality brand is an essential ingredient for success in a cannabis business. Your brand should convey an authentic story and also be relevant to the needs of your customers for more income. Founder of Feuerstein Kulick LLP, Mitchell Kulick: the cannabis industry is not different from other industries in the U.S. Therefore, you have a chance of making money as an operator or entrepreneur.
It is harder than many portray it to be and there are no guarantees. You can also develop a business that works to support operators by offering payroll solutions, point-of-sale-software systems, advertising platforms, legal services, etc. Whichever area you choose, be prepared o face hurdles worse than those that run fully legal businesses.
Kulick hopes that the risks and complications of the marijuana market will bring tremendous rewards to those who decide work hard and build this industry. Founder of Terra Tech, Derek Peterson: entrepreneurs and pioneers alike are eager to make some cash in the most lucrative ways. Peterson says that he has been doing this for more than seven years and the one thing that is more important than anything else is patience. It does not matter what area you choose; you must be patient.
You will not become wealthy overnight in the marijuana industry. There are everyday challenges. It is also not a legal business federally so if you are interested, you need to be ready to stay. CEO of Burn TV, Jason Santos: Santos says that the cannabis industry is even more interesting because it creates so many opportunities other than those of cannabis-based products. There is the ancillary sector that he thinks is more lucrative and attractive. It also has fewer legal restrictions. For anyone looking to get into the cannabis industry, Santos highly recommends the business services line.