Marijuana dispensaries, growers and processors aren’t the only ones making money.
Medical marijuana is a challenging, risky investment that has the potential for far-reaching rewards. Entry into a new market is always tough, and entry into a highly regulated market is even tougher. However, one can look to the healthcare, pharmaceutical, alcohol, tobacco, financial and insurance industries to see that profits can clearly be made, despite tough regulations.
The risks are great, and investors and medical marijuana entrepreneurs should always consult an attorney before embarking a new medical marijuana venture.
Medical Marijuana Revenue Still on an Upswing
Forbes and Fortune magazines have reported that the legal marijuana business should hit near $7 billion in sales by 2016, and it’s expected to triple in the next three years. California alone was responsible for $2.7 billion in medical marijuana sales in 2015, and Colorado’s legal marijuana industry is worth about a billion dollars.
Revenue has consistently increased since legalizing marijuana. As long as the political and social climate leans towards legalization, the revenue stream will continue to rise. Once marijuana is struck off as a federal Schedule 1 drug, new investors previously adverse to the federal legal risks will be jumping into the market, and states will be more inclined to legalize marijuana.
Opportunities for franchising will grow as the medical marijuana market becomes less risky.
Direct Investment in Marijuana Businesses
The JOBS Act of 2012 opened up opportunities for small investors to get into equity crowdfunding. This allows you to get access to companies that are not yet big enough to be publicly traded. The new crowdfunding rules are based on your income.
If you earn under $100,000 per year, you may invest up to $2,000 or 5% of your yearly income, whichever is greater. For those who earn over $100,000 per year, the limit is $10,000 or 10%, whichever is less. Crowdfunding opportunities are usually found online.
Publicly-Traded Medical Marijuana Stocks
More cautious investors or those who wish to diversify across many cannabis businesses can invest via the stock market.
A handful of medical marijuana companies are now listed on the Nasdaq exchange. These include British biotech company GW Pharmaceuticals, which offers a cannabis-based epilepsy drug; Cara Therapeutics, a Connecticut-based company which specializes in pain relief; and Zynerba Pharmaceuticals, a Pennsylvania-based company working to create synthetic cannabinoids.
There are even plans for medical marijuana mutual funds, which should be appearing within the next year.
Not Everyone Can Invest in Medical Marijuana
If you are ready to invest now in a medical marijuana business, make sure you consult an attorney. The Medical Marijuana Act has investment restrictions for physicians, public employees, family members, and former drug users and criminals.
If you’d like to invest in or start a medical marijuana business, contact a qualified law firm to have your questions answered.