There has been huge growth in the American cannabis industry since 2012, when it dawned on business that the government was going to legalize medicinal use sooner than later. Start-up costs began at less than $5,000 for home growers to over a $1 million for top line extraction equipment. Since then, average time to profit has been little short of phenomenal.
How the Cannabis Industry is Faring
Compared to other start-ups, marijuana is doing better than most, especially given the controversial nature of the product.
– 3% are facing ‘significant losses’
– 15% are ‘losing some money’
– 28% are at breakeven point
– 38% are ‘modestly profitable
– 16% report say they are ‘very profitable’
Where there is profit it comes fast, with 62% claiming success within 12 months, and only 6% taking more than 3 years. Compare that with dot com technology, where some of the biggest names are still bleeding money. Some day you could rue not casting your net, while the fish were running in such numbers.
Can I Invest in The Cannabis Industry?
You bet you can. In the past two years, venture capitalists and angels have been diving in, with more than a few newbies raising over $1 million in investments. We are sure they read the book about the South Sea Bubble. The attraction here is a tangible product, and a ready-made market. There are seven distinctly different areas to consider.
These areas are growing crops, providing cannabis medicine, selling the product for recreational use, trading in edibles / infusions, providing industry services, suppling supplementary products, and trading in legal cannabis generally, in order of investor preference.
Are You Saying Cannabis is Risk Free?
Of course not: There is more to success in business than having a product that sells, and cannabis is no exception. You could invest in something as rewardable as the American pet industry where the average spend is over $1,500 a year, and still come off second best if you made the wrong judgement.
The average U.S. cannabis user spends almost $300 more than that on their cannabis medicine / recreation, and the numbers are sure to increase post full legalization.
Growth is Largely a Given
Alaska, Colorado, District of Columbia, Oregon, and Washington have all legalized cannabis for personal use. District of Columbia and 23 states now regulate medical marijuana and more are considering it. The U.S. cannabis industry is nearing the tipping point for full legalization. The rush in on to participate. If you are an investor, this is something to consider seriously for your portfolio.