With the price of Brent Crude Oil lingering below $50 per barrel, it appears that the “Black Rush” is history; and many sophisticated investors are shifting their focus and portfolios on the “Green Rush.” As the cannabis industry continues to blossom, opportunities for enterprise continue to unfold for investors — from cultivation, sales, distribution, logistics and ancillary services — opportunity is everywhere. And with companies like Microsoft investing into KIND Financial, traditional and institutional investors are now eyeing the cannabis industry as a serious opportunity. But where to begin? Unless you are a full-time cannabis entrepreneur, many of the investment opportunities are in the Over-the-counter (OTC) stocks. OTC’s a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. — however, it is recommended to carefully analyze any of these investments as they are volatile and high risk.
In addition, on April 5, 2012, President Obama signed a landmark piece of bi-partisan legislation called The JOBS Act into law. The JOBS Act greatly expanded entrepreneurs’ access to capital, allowing them to go to the crowd and publicly advertise their capital raises.
Previously, private companies could only crowd-fund from accredited investors (the wealthiest 2% of Americans). On June 19, 2015, three years after the JOBS Act was initially signed into law, Title IV (Regulation A+) of the JOBS Act went into effect — which allows private growth-stage companies to raise money from just about anyone.
The OTC and JOBS Act have inadvertently opened the door for just about any company to raise capital via public investment, and unfortunately, many cannabis industry individuals are using this to fund their attempts at entrepreneurship — leaving their investors with broken promises of returns and shares of stock that are worthless.
SEC Charges ‘King Of Pot’ With Investment Fraud — Forbes.com
SEC Charges Marijuana-Container Company With Illegal Stock Sales — Bloomberg.com
The 3 Biggest Reasons to Avoid Marijuana Stocks — TheMotleyFool.com
Investing into the cannabis industry requires due diligence, careful planning, and strategy. For many “average Joe” investors, the time and resources required to safely invest in the cannabis industry are still out of reach. However, real estate is a tangible asset and is one of the most sought after component of operating a cannabis enterprise and for some that are familiar with the real estate arena, real estate could be not only largest, but safest investment.
Real estate startups have recognized the need for facilities to house cultivation, processing, and retail operations. Currently, there only a handful of startups that focus on cannabis real estate.
Looking for a cannabis-friendly property or want to buy a currently operating business? Try 420Property.com — a web-based startup that is aiming to be the Zillow of the cannabis industry. Or If you have specific property requirements and can’t find a property online or though a local professional, HerbFront has a solution — using a geographic information system (GIS), HerbFront can predict where compliant cannabis properties are located. Or if you have a large-scale operation in mind (and the capital to back it up), Kaylax Development and HF Capital can service as cannabis-specific landlords.
As the cannabis industry continues to flourish and blossom, the need for investment in real estate, real estate companies and professionals that are knowledgeable of the industries caveats will continue to grow.