The growth of the marijuana industry may be slowing slightly, but that isn’t stopping the millions of investor dollars circling the sector. Marijuana Business Daily has forecast that marijuana sales could hit eight billion dollars by 2019, not its previous forecast date of 2018. The recently completed 2015 MBD Factbook cited issues at the state level as the cause for the the slower growth curve. California was mentioned for its struggles with regulating its cannabis industry that has resulted in the closings of dispensaries. Massachusetts and Washington were both noted for their delays in instituting their medical marijuana programs.
However, eight billions is still a huge number and for this reason investment firms are clamoring to be a part of this nascent sector. “It’s changed dramatically,” said Steve DeAngelo of the Arc View Group. Arc View helps to connect cannabis companies with potental investors and has 54 companies raise $21 million. “It wasn’t until we got into the election of 2012 that we saw a whole new wave of investors and entrpreneurs entering the industry,” said DeAngelo. “That was really a signal for people that it was a lot safer.” According to the MBD Factbook, the amount of capital for funding start-ups and expansions has risen by an estimated 900% or more. This is creating a potential bubble situation where there are too many investment dollars chasing too few worthy companies. Douglas Leighton of Dutchess Capital agrees and said, “There is too much money and too few deals.”
The strategy for these investments firms is to get in early and establish themselves as the experts in the field. While 23 states have legalized medical marijuana, investing in the group still remains somewhat taboo. The group is lumped into the “sin” category of finance that includes casinos and tobacco. Plus, it doesn’t help the group when the Securities and Exchange Commission suspends trading on several publicly traded cannabis stocks. Another concern is that some of these funds create great fanfare when they start their fund or open their venture capital firm, but then get very quiet. Still, some of these financiers are pulling in big money and scouring the field for good investments and these are some of the top names in the group. (Read More Here)