Yes, you did read that right! Investing in marijuana is now not only legit but highly lucrative.
For the first time, a majority of Americans now support legalizing marijuana. Commercial marijuana sales are estimated at $1.5 billion today which could quadruple by 2018. Eighteen states and the District of Columbia currently allow its medical use.
Since the legalization of this drug, investing in marijuana is now an option for investors as the government has put many laws into place, giving options to both users for medicinal purposes and also invites investors to help this new industry grow above and beyond, legally of course.
After Washington and Colorado, the pot business is, if not mainstream, at least ready to push toward it. Advocates hope to legalize personal use in another 14 states by 2017, mostly among the 16 states besides Washington and Colorado where medical pot is legal (it's also legal in Washington, D.C.). Industry estimates say today's $1.5 billion legal market could quadruple by 2018.
With people now interested in investing in marijuana, investors such as Privateer and San Francisco-based ArcView Group are rushing to find consulting firms, software companies and insurance agencies to serve the new market. Even Privateer's strategy of merging small companies to form a big one is familiar: In traditional buyout shops, it's called a "roll-up."
Officials and investors have now scratched the term "growing the business" — and talk about "expanding". And forget the terms weed, ganja or pot. Investors are sticking to the more scientific term, cannabis. And the cannabis business is good!
The best thing about investing in marijuana, the new gold rush in pot is how familiar it sounds to people used to the technology business. The industry is now getting investors on board who have high paying jobs, and who can bring a wealth of knowledge and experience which is welcomed by the companies they are investing in.
The best way to estimate the potential size of the legal market for cannabis begins with the illegal market — which is somewhere north of $18 billion a year in pot Americans consume already, said Harvard economist Jeffrey Miron. The trade journal Medical Marijuana Business Daily says the $1.5 billion legal market could reach $6 billion by 2018.
There are still some obstacles to overcome, and that is because selling a product is still illegal in most states. But others are very ordinary, thanks partly to the business.
The legit side to this business is already thriving, for example the most valuable, San Diego-based Medical Marijuana, is worth about $200 million. They offer medicinal marijuana to ailing patience and the government is even giving them their blessing as they have restrictions put in place and deal with overseers that make sure things are done above the table and within the law.
"The industry has grown up a lot since we launched in 2011," said Chris Walsh, editor of Medical Marijuana Business Daily. "It was the activists and hippies. We're seeing more grownups over the past two years, and accelerating in the last six months."
Others involved still have an eye on the politics of the industry, as well as the economics. Dayton, for example, was chief fundraiser for the pro-legalization Marijuana Policy Project until 2010. Wiggins, who's on MPP's board, said,"they're not mutually exclusive."
Investing in marijuana is one of those quirky investments that will pay off big time for those interested, and for many investors, including Privateer, plan to cut their risk by not buying and selling marijuana itself, Kennedy and Dayton said. MJ Freeway Software Solutions helps pot-dispensary owners document supply chains once considered evidence of conspiracies, while Krane advises them on how to adapt best practices on prosaic issues such as store design and human resources policy from top retailers like Old Navy.
Some analysts are even calling this a new “Green Rush” in America. Even though federal law still prohibits both the sale and possession of pot, that has not stopped some clever entrepreneurs from cashing on in the demand for cannabis. There are many legal opportunities in the right areas if you know where to look.
The medical marijuana industry was worth approximately $1.7 billion in 2011, according to the Huffington Post. Prescription cannabis sales in Colorado alone surpassed $181 million in 2010.
Snack vendors are not the only ones able to make a quick buck on the marijuana legalization trend in the United States. There are many avenues that have opened up and Chip from sentiment trader says, "there is a right way to do this, and wrong way too. But there are simple steps to follow to ensure you do not lose you shirt, and minimize your risks."
