Study Finds Most Investors Comfortable With Businesses That 'Touch' Marijuana
Growing public acceptance of marijuana, highlighted by a slew of successful legalization initiatives, is encouraging investment.
Investors interested in getting into the cannabis market have become more comfortable with the idea of putting their money into businesses that "touch" marijuana, a new study has found.
The 2016 Cannabis Investment Study, conducted by New Frontier Data and Arcview Market Research, found that 68 percent of investors have become interested in investing either in companies that directly grow and sell marijuana or ancillary businesses that do not directly deal with cannabis.
The former is considered businesses that “touch marijuana,” while the latter does not.
“It is notable to see investors' appetite is now broadening beyond just ancillary services where there has been less stigma and risk attached in the past,” New Frontier Data CEO Gladha DeCarcer said in a statement.
“With the cannabis industry forecasted to grow at a compounded annual rate of 29 percent over the next four years, making it one of the fastest growing industries in the U.S., investors are now open to exploring any opportunity in the sector whether it touches the plant or not."
New Frontier Data specializes in analytics and big data associated with the marijuana business, while Arcview is a cannabis market research company.
According to information from New Frontier Data and Arcview Market Research, the report included a number of key findings about the changing landscape of marijuana industry investment. They include:
- 71 percent of investors expect to invest more in the cannabis industry in 2016 than they did last year.
- Nine out of 10 investors have interest in medical and adult use markets.
- Only 36 percent have interest in CBD markets.
- The states drawing the biggest interest from investors are California (57 percent) and Colorado (37 percent).
- When considering the global market, 64 percent of investors voiced interest in the Canadian cannabis market.
Most of those surveyed said preferred stock (76 percent) and convertible debt (73 percent) are their favorite investment choices. Public stocks ranked last.
Areas of investor interest.
While acceptance grows among investors for companies that touch marijuana, the report also shows the favorite area for investors (62 percent of those surveyed) remains ancillary commercial products. That covers a wide range of products, from companies that provide security to insurance providers, accountants and vaporizer companies.
About 46 percent have interest in non-flower products, such as edibles and marijuana-infused beverages.
The third most popular choice is cultivation facilities (38 percent). The report noted these facilities are especially popular investments in markets that limit the number of grower licenses. That area could prove more of interest as California company Innovative Industrial Properties, a REIT that invests in growing facilities, is seeking to become the first publicly traded marijuana company on the New York Stock Exchange.
The full report from New Frontier Data and Arcview Market Research can be downloaded from the company sites. The cost is $399.