By Lindy Snider
Cannabis investing: How do I get in? !!
It’s one of the most common questions I’m asked.
As the Cannabis industry continues to explode, the excitement over investment opportunity goes hand in hand with its meteoric growth. While there have been many articles to educate about investing in this space, there is still a great deal of reticence to jump in.
It’s understandable as this industry is still so young and, thus, there is not a definitive trend to analyze nor even a clear understanding of how to place a valuation on so many of these new companies.
The most important piece of advice is this: don’t invest for ‘fear of missing out’. We are still in the very early stages of an industry that has yet to see a shakeup. What this means is that there are dozens of new startup companies emerging every single month.
What is most notable in this particular industry is the incredibly fast rate of innovation. Thus, a company I may have reviewed as recently as this past June is already obsolete as a newer version of their product may have been launched just last week. Since I began investing in the cannabis sector, this type of 3-4 month innovation cycle is not at all unusual.
Competition is fierce in certain sub-sectors including processing equipment, agricultural products and services, lighting, technology just to name a few.
So…how to invest? How much do you need to know?
First, you need to target an area of the industry that most interests you and learn about it. If you want to invest in this space yet are wary of the legality issues surrounding the plant itself, there are many alternatives including those listed above. The tech surrounding Cannabis cultivation, for example, is an extremely robust and exciting space so, if you’re generally into tech investing, there are strong cannabis-specific tech companies to look at.
Many people simply don’t have the time to spend investigating dozens of companies and doing due diligence but there are emerging funds that are worth looking at. One of my favorites is Poseidon Asset Management due to their strong team and conservative investment strategy. And they outperform every index out there.
Another good way to learn about the industry is to attend a conference or two. The Marijuana Business Conference is held multiple times per year throughout the country and many emerging companies are featured while strong industry education is provided.
If you’re a more serious investor or want to take a deeper dive, you can join an industry specific investor network such as The Arcview Group. They spotlight investment- ready companies at various stages in a more intimate setting. It allows for a great opportunity to both learn and to network. I have found them to be one of the most valuable resources in the industry.
The main concern for many looking into investing is the fear they don’t have enough money to get in. That’s very likely untrue. You don’t need millions. Many early stage companies are looking for seed or growth capital. You may often be looking at the $50,000 to 100,000 range to get in. If that feels like a stretch, a lot of creative folks I know are creating pools to get to those numbers, such as buddy groups investing as a single unit.
The long and the short of it is this: there are ways to get in. But take your time as we are only at the tip of the iceberg.
Do you have questions about cannabis investing? Send them to firstname.lastname@example.org