Cannabis Investment Experts' Advice to Potential Investors

Daniel Banas  |

The cannabis industry is one that’s filled with tremendous opportunity - tens of billions of dollars worth of opportunity, according to recent estimates. However, there’s a reason why there’s so much potential for growth in the cannabis sector in the coming years: Today, the industry is still mired in legal challenges, making for substantial risk for any investor. What’s more, it will no doubt remain that way until cannabis legalization is reached on the federal level.

That said, the sooner you get a sense of the how the industry works, and the challenges it faces, the better off you’ll be when you’re ready to invest in this rapidly growing sector. And increasingly, it appears that day will be here before too long, with legalization moving forward quickly at the state level.

To help prospective cannabis investors to navigate the current market, we’ve compiled advice and insights from some of the leaders in cannabis investment regarding where the space is headed, and what opportunities exist in the space today.

Rob Hunt, Partner at Tuatara Capital:

What They Do: Tutara Capital manages legal cannabis industry sector-specific investments.

“Investing in a publicly traded cannabis business should follow the same path as investing in any other public company. Prospective investors should always take the requisite time to read all recent filings and look at the financial soundness of the underlying business. If a company is not fully reporting or is reporting losses consistently, then it should be avoided. Of course, if one is only interested in flipping a stock on momentum or news, and does not look at the business as a long-term hold, then even the worst cannabis businesses, of which there are many, can be a viable way to make a short-term gain. I would not, however, suggest that the average investor engage in this type of behavior as it is both risky and vacuous."

"My advice for the cannabis enthusiast who wants more exposure to the cannabis market is to wait at least a year. The public markets will open to the better private companies out there and when they do there will be tremendous opportunity. Until then, study and learn more about the nuances of the space so you know where your entry point will be when the time is right.”

Brett Roper, COO and Co-Founder at Medicine Man Technologies:

What They Do: Medicine Man Technologies offers cannabis consulting, licensing, cultivation and dispensary operating solutions in the cannabis sector.

“When investing in public companies in the cannabis industry, one needs to take careful consideration of the overall performance of the target companies. Any investment you make in the space is subject to a number of risks beyond what is normal for non-cannabis industries, given federal illegality and shifting state-specific regulations, but the potential for growth is astronomical. It’s also important to note that there are a number of different categories of public companies in the space, including dispensary, cultivation, manufacturing, service providers, material providers, testing, state-specific, and investors, and all have their own benefits and drawbacks.”

Leslie Bocskor, President at Electrum Partners:

What They Do: Electrum Partners offers advisory services in medical and recreational cannabis and ancillary businesses.

“It is crucial in the legal cannabis space, just as much as in any other regulated industry if not more so, to enter with a strategy. Are you building a diversified portfolio of businesses in the sector spread across all seven verticals? We are looking here at medical, adult use, life science, nutraceutical, hemp, ancillary, and veterinary. Now ask, can you hold the stock for years? Or are your investment objectives short term?"

"Liquidity is obviously a plus for investing in public cannabis companies. Other benefits to investing in OTC stocks include access to public information allowing for in-depth research on each investment opportunity. That being said, the current cast of publicly traded cannabis characters leaves a lot to be desired. Many do not provide accurate public information. Many do not have clearly articulated business models. Few have clear business models, solid management teams, and can clearly communicate their core value proposition.”

Jeffrey Zucker, President at Green Lion Partners:

What They Do: Green Lion Partners offers consulting in the regulated cannabis industry.

“Aside from MassRoots (MSRT), we don't feel that the public sector is the best way to get involved investing into the cannabis industry at this point. A great first step would be to look into joining the Arcview investor network, which brings members many of the most exciting opportunities in the private sector. Investors looking to learn more about the industry and specific sectors that interest them are welcome to contact us.”

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

Companies

Symbol Name Price Change % Volume
MSRT MassRoots Inc 0.09 0.00 1.12 562,225

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