The uncertainty in the cannabis industry today is due to widespread misinformation and poorly based speculation on the market pressure. As we move closer toward ubiquitous legalization, regulations are introduced every year. Although guiding principles are needed, like any other normalized industry, the standoff between state and federal law creates operational difficulties and discourages outside investors. The legality of the plant makes cannabis look like a risky prospect.
From the outside looking in, many people view cannabis investments as dangerous. Those investors are throwing in the towel early though. Cannabis will be more legal tomorrow than it is today. Those avoiding the risk will be on the outside looking in when the industry takes off.
Cannabis is a growth-market that is going to make people in this country exceptionally wealthy. While it may seem risky, there are plenty of traditional investments that are more risky with far less reward. This may sound odd, but coming off of a few years of unprecedented growth, it's the truth.
With the majority of states having legalized marijuana in some form, the Federal Government can not ignore the voice of the people for much longer. The 2020 Presidential Election race is already showing that, as legalization continues gaining bi-partisan support. At this point it isn’t a matter of if, it’s a matter of when.
Cannabis is a safer bet than it appears because of the nature of the product, as it’s not your typical commodity. It’s closer to alcohol than real estate and people will get altered whether it’s a recession or not. When you are selling euphoria there will always be buyers.
The cannabis industry is in the perfect spot for early investment. From my perspective, anytime a capital market begins to accept cannabis investments, it moves in stages. It starts with small private investments, as the newly legalized state markets gains momentum. Sales increase and larger investment firms move in, flooding the market with capital. Then, large firms with huge investment backings make moves to acquire small market players, as they consolidate the market. Just like any standardized industries, this is how massive, billion dollar companies are built.
Cannabis is also slowly working up the ladder of capital markets as legalization becomes widespread. Right now, venture capitalists would be fully embracing cannabis if not for limited partners of these VC firms being fearful of the risk. My company, Cliintel Capital Management Group, has been working on this for over four years now. Our unique structure includes a blind pool venture fund that allows us to not disclose investors, and lets us navigate the market with an agnostic venture capital strategy.
Managing this risk is creating immense amounts of opportunity for us and other investors across the country. As more capital is made available to companies, those companies are going to grow. Legalization is marching inexorably forward, along with the multipliers that access to greater capital markets allow. Those multipliers aren’t a gamble, they’re fundamental to how markets work.
This doesn’t mean every company is going to make it through the oncoming legal and regulatory upheavals - as diligence is due before any investment. Companies with the right brand presence, distribution channels, and savvy leadership will see their way through to the other side. These organizations will likely see astronomical growth by the time they get there.
This means marijuana isn’t just a safe bet, it’s actually the best growth investment you can make right now. It’s not real-estate investing, it’s buying real estate around Orlando in 1969 - knowing Disney World was going to open by 1971; it’s buying beachfront property in Malibu in the 1930’s; it’s investing in Google in 1999.
The Cannabis industry is the single greatest growth opportunity of our generation, and we will not be missing out.