With so much risk involved, cannabis investment is a challenging topic. But we’ve outlined the essentials of investing in marijuana. As with similar momentum driven opportunities, this difficulty stems from two factors. The first is the normalization and legalization of weed as well. The second is the end of prohibition for a market that is growing massively and not easy to manage. Investors have a lot to consider while finding ways that they can expose their portfolios and remain financially safe. Let's take a look at what you should know about cannabis investment if you want to start investing in marijuana.
Marijuana touches a wide range of verticals where investors have the chance of focusing their attention in places where opportunities for investment are wide ranging. Each of these investment opportunities carries its own weight and distinct positioning. For example, if your portfolio is diversified, you may have a range of agricultural commodities reach from growth to harvest. Your involvement may even include distillation, delivery, production and sales. Some of the real estate opportunities for cannabis investment could reach each stage from development to retail. Technology and distribution are also cool ways to invest in the cannabis industry. It is all about locating the aspect to which your portfolio fits in.
Each of these verticals carries a distinct atmosphere, barriers and opportunities for entry. However, from an investment viewpoint, this is why you might have so many areas of opportunities. Within the industry, tech-savvy individuals and engineers in the Silicon Valley are easily identified by the influence of specific hardware used by companies like PAX, which administers a similar design and model like APPLE. Another example is EAZE, which is a company that carries Postmates for weed model. If you are an investor with experience in businesses driven by intellectual property, this might be of great interest to you. On the other hand, MedMen is a company that focuses on branded retail shops that sell high end products in New York and the city of Los Angeles where the location does matter as much as the products do.
The Real Estate Entity
Most investors are familiar with the risks that come with the physical real estate market for cannabis investment. The investor that put their dollars in the real estate element of marijuana usually understands the kind of strategy to use in geographical positioning and the price that they have to pay for it. Cannabis investment should be all about knowledge and understanding. It is not wise to put your investment dollars into something you don’t know or understand. However, for risk management, it is best to use a diversified portfolio to invest. In so doing you won’t have to limit your cannabis investment to only one part of the industry.
The Classification and Legal Status
One other aspect that you may want to consider for cannabis investment is the status of hemp and weed. Hemp products associated with CBD are viewed as being therapeutic and so, has become mainstream with added appeal to a particular set of consumers. In addition, hemp is now legal, despite FDA regulation. But the product is easier to obtain in most areas of the United States. On the other hand, cannabis derived THC products are seen as being only for recreational use and can only be obtained in licensed marijuana dispensaries. And so, it is safe to say that anything that contains THC has to be viewed with a legislative eye when considering cannabis investment.
If you don’t want to take a huge risk on cannabis investment, the next best thing is to partner with someone who knows a lot more about the industry and market. However, it is important to do your due diligence first before jumping in. Focus more on people rather than the actual plant. Surround yourself with knowledge of all the gray areas associated with the marijuana industry.