Want to invest in marijuana? The marijuana business prevents enormous opportunities for an investor to take advantage of a 21st century gold rush. While marijuana remains illegal at the federal level, several states have passed laws legalizing and heavily regulating marijuana for medical use.
A few like Colorado, Washington, and Alaska have expanded into allowing marijuana for recreational use (no fake doctor’s note required). Because of heavy regulation, the opportunity is probably even bigger because heavy zoning restrictions and strict limits on the number of dispensaries will present major barriers to entry.
Those dispensaries lucky enough to have a permit (or landlords that lease to a dispensary with a permitted location) will benefit by the government effectively stifling potential new competitors. In some jurisdictions, there may be only one or two players that can take advantage of a legal monopoly for their area.
When thinking about investing in marijuana, a few obvious possibilities come to mind: dispensaries, landlords to dispensaries, farm land owners, financial services companies to dispensaries (credit card processors, banks), and transportation of marijuana from a grow site to the dispensary.
The problem with every one of these is that you could get arrested. Marijuana is illegal and the Drug Enforcement Agency (DEA) could take action at any time they choose. The more money you make, the bigger target you become.
To legalize invest in marijuana, you need to find companies that benefit from the marijuana boom, but do not actually handle the drug themselves. While these companies may not be completely immune from any action whatsoever; companies that don’t handle marijuana are much, much less likely to face legal action.
Another thing to keep in mind: federal law still outlaws the production of bongs; I can remember back in 2003 when federal agents arrested the owners of Stone Glassworx in Phoenix. Long story short, there are ways to invest in marijuana without directly investing in marijuana.
Companies that Stand to Benefit from the Marijuana Boom
1. Food Companies – when someone eats a pot brownie, truffle, gelatin square, etc. there are going to be some food additives that will likely go into it. There are companies that sell additives that mask the taste of marijuana or that flavor over the taste. Other food companies sell flavored gelatin cubes that allow an access point for the dispensary owner to insert marijuana inside.
2. Hydroponics Product Manufacturers or Stores – hydroponics allows someone to grow plants without soil. Hydroponics technology allows for much higher yields in small amounts of space. It might be sold to someone growing a small amount of marijuana or a dispensary running a massive growing facility. Water and air pumps, reservoirs, trimmers, and plant food are just some of the products needed. Even conventional soil-based growing presents opportunities for companies that sell soil, nutrients, etc.
3. Marijuana-Oriented Websites – there are several websites that review, blog, etc. about marijuana such as the locations of dispensaries, the quality of certain products, etc. While not completely immune from prosecution, websites that are structured to either provide general information or independent unpaid reviews will benefit if they generate significant traffic and eyeballs for advertisers.
4. Marijuana Test Kits – just as parents worry about their high school kids gaining access to alcohol, they also are going to be concerned with marijuana, especially if several new dispensaries sprung up around town. Both the parents and their kids may be paranoid (the parents may be paranoid their kids are using marijuana, the kids may have ingested too much marijuana and be suffering from a side effect of paranoia). Companies that produce home test kits stand to benefit.
5. Containers and Bags – marijuana smells and people would prefer to generally to mask that smell when they are transporting or storing it. Companies that sell various types of containers and bags that mask the smell will benefit. Also, people need measuring devices and scoops to put the product in the container or bag.