​Ancillary Businesses are Helping the Cannabis Industry Explode with Growth

Zoë Biehl  |

There’s no denying it—the cannabis industry is growing faster than, well, a weed. In 2016, cannabis sales in North America grew by a massive 30%, and sales are projected to reach $20.2 billion by 2021. This is a huge deal, especially considering the industry is still in its infantile stages.

There are countless marijuana-based businesses out there, with more startups forming every day. It’s not just cannabis farms that are reaping in the profits, but all kinds of ancillary businesses that never actually touch the plant. From hydroponics and cultivation products to professional training and education, consultancies, media companies, the plethora of new technologies—the list is endless, and so are the opportunities.

Ancillary businesses are doing especially well because most of the legal and financial risks that apply to directly working with weed don’t affect them. The bulk of the regulations for businesses in the cannabis industry are only applicable to businesses that actually “touch” the plant—cannabis growers, processors, and sellers—according to the Controlled Substance Act. It is still federally unlawful to grow, process and sell marijuana, and thus these businesses are denied bankruptcy protection and are discriminatorily taxed, among many other heavy regulations. These businesses are still doing quite well for themselves, but they do come with higher risks.

Businesses that aren’t involved in touching cannabis, however, are a safer bet for those interested in getting involved in the industry, and many are jumping on the profitable bandwagon, as one expert explains:

"It is really eye opening to go to a cannabis conference and to see how many ancillary businesses are springing up. The reality is that, despite being illegal on a federal level, medical and adult-use marijuana are by most measures real industries that cannot be ignored and that have the same needs as more mainstream business. So, from payroll providers to point-of-sale software to compliance companies, law firms, accountants, and the list goes on, many businesses that are ancillary to the industry are now part of this revolution. Interestingly, many of the ancillary tech companies attract the interest of investors who want to get exposure to the cannabis vertical but who are still not ready to cozy up to the plant," says Mitchell Kulick, Partner at Feuerstein Kulick LLP, a cannabis law firm that provides legal services to companies, funds, investors and lenders in the space.

As the cannabis industry continues to explode in growth and more people are scrambling to get involved, there are huge needs that need to be filled. These ancillary businesses are filling in the many gaps and are helping the cannabis industry become stronger and more legitimate.

Plus, as more states legalize cannabis and allow their citizens to grow plants at home, there’s a huge rush of novices that require assistance to make their lives easier. It can be quite overwhelming for beginners trying to start a home grow. That’s why businesses aimed at making growers’ lives easier are doing so well, like BloomBoss, a designer of high-efficiency, high-performance LED grow room lighting and related accessories.

“With passage of each new cannabis legalization measure, masses of aspiring growers enter the market—they lack equipment, expertise, and access. We’re seizing the opportunity to educate and meet the needs of a whole new generation of growers who are coming out of the shadows and entering the space faster and more enthusiastically than ever before. Though we design products ideal for growers of all experience levels, we take a unique position by paying special attention to those just starting their journey as they comprise more and more of the home cultivation market,” shares Lauren Seigle, Marketing Manager of BloomBoss.

It’s a very exciting time to get involved in the cannabis industry. There’s boundless opportunities to collaborate with a huge variety of businesses, all working together as we figure out how we want this new industry to look and function.

Will Waldrop, CEO of Evio, Inc. (OTCMKTS: EVIO)—a cannabis biotech company providing research, analysis and consulting services to the medical marijuana industry through its subsidiaries—says it best:

"The development of ancillary industries to the cannabis space has allowed it to extend a broader reach and establish a level of legitimacy (while also providing income) to the area as a whole. While cannabis continues to be federally illegal, seeing ancillary industries blossom out of the cannabis space gives me hope that business owners and cannabis enthusiasts will continue to work towards the advancement of causes and innovation related to cannabis in any way possible."

Zoë Biehl is a writer, editor, and wandering anthropologist. She is senior editor at Psymposia Magazine, a writer for Time Out Israel, and does freelance writing and editing for clients across the United States and Israel, where she is currently living. By focusing on working with non-profits, Zoë hopes to use her skills to make the world a better place in whatever small way she can. She holds a degree in anthropology and sociology.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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