Investing in Marijuana Still Strong Ahead of Legalization Vote

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Public opinion about marijuana has changed a lot over the last few years. 25 states have legalized medical marijuana and 4 states will vote on the issue on November 8th. Colorado, Washington, Oregon, Alaska and Washington D.C. have legalized recreational marijuana with 5 states, including California and Nevada, deciding on whether to legalize on Tuesday. The industry is clearly booming and doesn’t seem to be going anywhere soon. In fact, as each state legalizes the plant, the industry continues to grow. For this reason, savvy people are beginning to realize that investing in marijuana is the way of the future.

The Early Birds of Cannabis Investment

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Despite the uncertainty of legalization in key states, people are still keen to invest in the marijuana industry.

The industry began to take off in 2013 and 2014 but in 2015, it really exploded when marijuana investment deals more than doubled. According to CB data, 2015 saw over $200 million in new investments. 2016 has calmed down a little, as investors wait for the results of the election before deciding on their next step, but over $100 million in investment deals have still taken place. Investing in marijuana-related business has become the trend that will continue into the coming years. Wall Street firms such as Merrill Lynch have been paying attention, including marijuana investments in their recommendations to clients, and Cowen released a comprehensive analysis of the industry, projecting that it will be worth $50 billion within the next 10 years. It is currently a $6 billion industry.

Popular Ways of Investing in Marijuana

Despite the fact that the industry is still flourishing, marijuana still remains illegal on a federal level. For this reason many investors are opting for investing in marijuana related businesses while steering clear of direct investments in marijuana itself. Lindy Snider, whose late father owned Philadelphia sports stadiums, invested in Kind Financial, a startup whose objective it is to keep growers and retailers compliant with the ever changing marijuana regulations by creating specialized software. Microsoft Corp partnered with Kind Financial to develop the software, which allows regulators to track marijuana from seed to sale. Other investors are getting into fertilizers, grow lights and payroll services. A number of apps connecting retailers with manufacturers or stores with buyers have also emerged.

The Psychology of Early Investing

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Taking the risks on early investment could see big returns if legalization passes.

Investors getting in at this time are doing so with the idea in mind that, over the coming years, newcomers will be entering the industry with the intent to buy as opposed to build. Investors will be able to make a lot profit at that point. The idea seems to be for an investor to look into a niche area within the marijuana industry of which he or she will genuinely want to be a part. At this point, an investor can build something substantial and worthwhile.

California holds the 6th biggest economy in the world. On November 8th, residents will vote on whether or not to legalize the adult recreational use of marijuana. If recreational marijuana is legalized in the state, it is likely that its influence would inspire more and more places to legalize as well. Not to mention how profoundly the business would boom should it become legal. This is another factor behind the inspiration to invest in marijuana today.

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