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What Are The Best Investments In The Growing Cannabis Industry?

invest investing marijuana cannabis industry expertI have been involved in the cannabis industry for a long time, way before there were any legal medical marijuana or recreational marijuana states. This of course was when the entire industry was in the shadows, and the only ‘businesses’ that existed were blackmarket related. The only overhead and investments involved were sandwich baggies, grow supplies, and scales. My how things have changed.

One of the most common questions I get these days is, ‘what is the best investement in the cannabis industry?’ It’s a logical question, considering how much money is involved in the cannabis industry right now, and how much growth is likely to occur in the upcoming years. Most people want to invest in a grow operation, or a dispensary/store, or a smoking device. While these things are good ideas and are probably fun to pursue, I don’t recommend them simply because so many other people are pursuing those ideas. Below are five business ideas that I think are the best ones in the industry right now to invest in. If you have ones to add, please do so in the comments section:

Cannabis Testing

Cannabis testing is going to be a requirement going forward in the cannabis industry. All recreational states require it, all new medical states require it, and soon, all older medical states will likely require it to as they revamp their laws. Not that many people are trying to get into this sector of the industry right now because it’s not as ‘sexy’ of an ideas as establishing an industrial garden or retail outlet. There is also virtually no branding right now for cannabis testing, so if someone started a lab and had a strong branding campaign, they could easily become the ‘gold standard’ of testing and push out the limited competition that’s out there right now. People need to be able to go into a retail outlet and say, ‘I want this strain because it was tested by X company, which is more reputable than this other company.’ That doesn’t happen right now. People just see that the cannabis was tested by someone, anyone, and go from there, rather than looking for cannabis that was tested by a particular company.

Cannabis Real Estate

People are scrambling to get into a cannabis friendly warehouse, or retail location, or even a cannabis friendly dwelling unit right now more than ever before. There are a handful of companies that are acquiring real estate right now and marketing properties exclusively to the cannabis industry, but a vast majority of cannabis businesses right now are just simply renting from anyone that will allow them to do so. If someone could offer real estate to all of the people that can’t find a cannabis friendly property to house their business right now, they would be very, very rich.

Cannabis Entertainment

One of the most successful business models I’ve ever seen in the cannabis industry in Oregon is the ‘World Famous Cannabis Cafe.’ You can go in there for a small door fee and consume all the marijuana you want in a social environment. For the same reason that people go to clubs and bars that revolve around alcohol, so too will people that consume cannabis want to go out and socialize with other like minded people. If you’re single, and consume cannabis, you want to go somewhere to meet other singles. If you are a couple that consumes cannabis, you want to go out for a night on the town and frequent establishments that allow you to consume cannabis. These establishments can sell cannabis too, but door fees and concessions are more than enough to generate a lot of profit, and wouldn’t require a retail license at all. This is a great idea for investors that want to operate in an area that limits or bans retail establishments. I’ve been saying over, and over, and over that if someone opens up a chain of cannabis arcade game establishments, they will be make so much money they won’t know what to do with it. I know I’m going to open one up eventually whenever I can find an investor! Cannabis tourism would fall under this category too – bed and breakfasts, tours, etc. It’s a very hot, yet underserved sector of the cannabis industry right now, which is something that I don’t think will last very long.

Cannabis Events

If you have ever been to a quality cannabis event, then you know first hand just how packed they are. If an event charges $100 to attend, and there are thousands or tens of thousands of attendees, it’s pretty easy to see that there is a lot of money being generated. Add to that vendor fees and other things that you can charge for, and the profits grow even larger. There’s obviously money that has to go out to rent the facility and pay speakers/performers, but there’s so much money left over that it’s a great investment, especially considering the event is only for a day or weekend usually. Business seminars, concerts, etc., they are all good ideas. Just realize that not all events are created equal, and consumers know that, so come correct. Long gone are the days when you can just rent a park, invite unknown bands, have crappy vendors, and expect to make money hand over fist.

Cannabis Consulting

Consulting is big business, whether it’s in the cannabis industry or otherwise. People that are experts in their field get paid a lot of money to share their thoughts and ideas, and the cannabis industry is no exception. There are a lot of people out there right now that are getting paid a lot of money for consulting cannabis businesses, and I have to say, they are not that good at what they do. Current cannabis consultants usually, but not always, fall into one of two categories. 1) They have a great knowledge of business, but don’t know very much about the cannabis industry/movement/culture, which has a lot of nuances that are very important to know in order to succeed in the cannabis industry. 2) They know a lot about the cannabis industry/movement/culture, but they are horrible at standard business skills like time management, money management, and overall vision. There are a handful of good ones out there, but most of them I would never endorse. This has created a prime opportunity for people that possess both traditional business skills and cannabis experience/knowledge.

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  • wowFAD

    This morning, I was wondering how/why the financial industry — an industry that was only ever intended to facilitate the business of other industries that actually produce goods or provide services — became the most profitable industry ten times over in the United States. The “greed is good” era of the 1980s and 1990s produced a new kind of capitalism in which you were no longer rewarded *as much* for having a product or a business that *does* something nearly as much as you could be rewarded in the financial sector, scraping off a tiny percentage from every transaction you facilitate.

    Venture (vulture) capitalism took this notion to a new level. With enough money from big banks, there’s no company you cannot buy controlling interest in. So essentially, their product *is* industry, which they buy/sell and profit from via the buying, selling, and leveraging of debt. Put simply, America’s financial industry discovered how profitable it was to buy up companies, load them up with debt, and sell off every asset that isn’t bolted down before the inevitable bankruptcy kills the company and puts its employees out of work. This has been going on for over two decades, unabated.

    The result? America isn’t the leader of industry we once were. In fact, very few jobs in the US produce anything besides cheap food. We aren’t really known for *producing* anything, anymore.

    So the prospect of a burgeoning cannabis industry that could, state by state, revitalize this country is very exciting to me. This is why it’s so vitally important to get the more “agriculturally inclined” states (you know who you are) onboard with the hemp/cannabis industrial revolution. Word is Kentucky’s first hemp crop is doing wonderfully. I’m told there is more biofuel potential in one acre of industrial hemp than there is in three acres of corn. Not to mention the hundreds of products that can be produced from hemp.

    And to think, the only obstacles in the way of a thriving legal cannabis industry revitalizing this nation are its own leaders dragging their feet, and taxpayer-funded efforts to deceive the American people about the purported “dangers” of cannabis (aka, damn lies). This is one reason I want Rand Paul to get the 2016 GOP nomination — he may not win the Presidency, but that man *wants* to put the drug war front and center for the voters to decide. Whoever the DNC nominee is, she *cough* or whoever… probably will try to avoid the subject unless forced to address it. Or worse, she *cough* or whoever… might simply laugh off the issue or try panning it as being “soft on crime.” By 2016, however, that could be a pivotal mistake on her part *cough* or his part…. whoever. America is *already* sick and tired of the drug war, and we aren’t going to warm up to it over the next two years.

    I will not vote for Rand Paul (for several reasons, Paul-bots — no need to rekindle that argument), but I can also NOT vote for the Democratic candidate, either, if she *cough* or whoever… opts to shirk this issue. I’m tired of politicians laughing whenever someone brings it up.

    By 2016, I want this list of potential cannabis businesses to be three times as long. “Testing” could be fully fleshed out into a multi-faceted quality assurance industry, ranging from lab testing to consumer satisfaction surveys. The real-estate and entertainment aspects of the cannabis industry will have dozens of avenues to profit they’ll walk together, hand-in-hand. Not to mention the profit to be had from harnessing the innovative spirit of the cannabis culture — new, interesting ways of consuming cannabis, I think, will make the most money out of all these branches of the industry, whether we’re talking about edibles or MacGyvering together vaporizers and smoking devices.

    I don’t feel like I’m overstating my case when I say the possibilities are endless.

    • madscrapper

      Cost an average of 7 million$$ to start growing “legally” for profit in ct if your one of the lucky few outta hundreds of applicants to be approved after large fees are paid.smh,,,who gets to profit?reminder of big tobacco anyone?

      • wowFAD

        SEVEN MILLION??? Geez!!! That sounds like a perfect recipe for what Johnny was cautioning against in this article when he addressed the growing industry of cannabis consulting: anyone with that sort of cash will probably have great business acumen, but probably won’t have any insight into the plant or the culture.

      • doubtfultoker

        Totally second guessing those numbers unless your real estate is ungodly high priced.

      • Paz

        Out here we operate as non profit associations so can set up for a few k never mind millions

  • HeyJah

    Great topic! But I question the validity/necessity of much Cannabis testing. If the People have access the free market will sort things out pretty quickly. Like I know a fine horse when I see one (even though I have nothing to do with horses), I think folks can easily see quality in a Cannabis flower – if they have the chance to actually see a really fine Cannabis flower.

    Don’t be greedy. Keep Cannabis a cottage industry.

    • Mimi Miller

      I think the labs are to check for pesticides, poisons and with medicines you must check for benzene rings making sure there are none as well as the % of THC/CBD/THCa or any of the other more than 400 compounds in the plant … people who are sick do not want brick weed medicine. Testing is a Big Business.

    • besmartaboutit

      Thinking old school is a happy place until you wake up and realize this ain’t your grandaddy’s “smoke and be free” world anymore. The only way marijuana will ever be legalized is through it’s dire need in the medical industry first as we have seen in every state so far and will no doubt continue to follow that with each state that entertains the concept of decrimilization and/or legalization to come. And the only way it can be used as such is through strict quality control which absolutely includes testing.

      The “free market” as you call it is what states wish to eliminate due to it’s depth of criminal involvement. The best thing for our country and the people is to have legal access for quality, availability and financial reasons.Who in their right mind would not want easy access, availability and reasonable prices other than minors and/or criminals anyway? I have been using since 72 and live where it is not legal yet and I hate dealing with street dealers with limited quality, selection, availability and excessive price markups not to mention watching for “the man” in my rearview all the time.

  • Sri Bud

    Excellent analysis, Johnny! But which *specific* publicly trading companies would you invest in that are currently providing these services (or getting ready to)??

  • JIMMYLIMO

    Want to REALLY invest in Weed ? How about buying the town of WEED, CALIFORNIA ? http://visitweed.com/ … Beautiful Weed, California. “High on the Slopes of Mt Shasta”. Skiing, fishing, golf, hiking, mountain climbing, the cleanest air and purest water. There are many vacant storefronts in historic downtown Weed. Real estate prices and rents will never be lower. Having a “Weed, CA” address for your canna-business will be golden in the upcoming hemp economy ! I-5 runs right through town, great for shipping. A big labor force is available for manufacturing and retail. Weed is also home to the College of the Siskiyous. There is no better time to invest in WEED ! Weed, California, that is. Get in on the ground floor !

  • Jon

    One thing people have to consider if investing is that the price of shares is at least in part affected by investors, and not everyone who does/will invest in MJ related companies are actually interested in MJ at all. They are interested in money. When growlife had some issues a few months ago and the SEC halted trading of their stock, the price of most MJ related stocks fell dramatically even though they had nothing to do with growlife. And most of those companies are having a hard time recovering. Even the companies that are profitable and doing amazing things. People who make a living investing huge sums of money into the stock market get their panties bunched up over the slightest thing and sell off all their shares for stupid reasons all the time…and it drives the prices down. And it doesn’t help when fly by night online stock “experts” tell people to buy and sell for no reason other than to drive the price of one particular company or another up and down for their own gain.

  • Cannabis Tourism

    We’ve got a couple of WA State Cannabis Tourism non-licensed business opportunities available. http://growa.us/investments-in-cannabis-tourism/

  • Guest

    why was my post not accepted?

  • Paz

    I might use some investment out here in Spain at some point. Visions of Harborside :)

  • Jennifer Martin

    As much as the price of wholesale marijuana is
    dropping, grow operations are still prime targets for theft, both from
    employees and outside criminal elements. Both your marijuana business plan and your site setup will need to take this into consideration.