Crowdfunding Is Revolutionizing The Cannabis Industry. Here's Why.
Crowdsourcing investments may be the thing that speeds up the legalization processes in the U.S. and Europe.
The cannabis industry has seen two major upward surges in the last 5 years, the first came with the national legalization of cannabis in Canada which was subsequently followed up by many states in the United States and the second has come during this COVID-19 pandemic.
While this time has been a hard time for the U.S. and all other countries currently impacted by it, cannabis has helped ease anxiety and stress for many people. The consistent affirmation of cannabis businesses as essential services during this era has done wonders for the industry.
The cannabis industry is not just enjoying the upsurge caused by the epidemic, it is also experiencing the proliferation of crowdfunding or crowdsourcing platforms internationally.
Here are 4 reasons why crowdsourcing has been and will continue to be great for the industry.
1. Crowdfunding is rapidly reducing the shortfall in supply
In the U.S. and most of Europe, the demand for cannabis products especially of medical cannabis is still way higher than the supply and the Covid-19 crisis has upped it even more. Even if demand were to fall post-COVID-19 (Which is highly unlikely) there will still be excess demand and a shortfall of supply.
The typical way to tackle this is to grow more cannabis, but not every business green-agribusiness can grow more than their present capacities. The limits on a budget make it quite difficult for some to increase production significantly.
However, crowdsourcing is doing a great job of encouraging cultivators and cannabis producers to make more by giving them access to funds that they would have been unable to raise otherwise. This has already caused a slight increase in production but is predicted to cause a larger shift in the coming months as the world recovers from COVID-19.
2. Crowdsourcing can break monopolies in the growing sectors
Before the dawn of the widespread legalization of cannabis, at the time when growing marijuana was still dubious, to say the least. It was private cannabis growers who braved the consequences and weathered the unlicensed storm. To a large extent, these private growers have been left in the dust since legalization hit and as major agri-businesses swept in and took over the market, building huge monopolies in the sector.
However, the crowdsourcing innovation that has recently taken the industry by storm has given them a fighting chance. It is common knowledge that good amounts of competition are healthy for any industry to flourish. The kind of competition that crowdsourcing envisions is very beneficial for the cannabis industry; an industry that still has a massive margin for growth.
The potential for breaking these huge monopolies is exceedingly desirable in the industry at a time like this, to enable it to grow to potential.
Crowdsourcing also helps individual growers overcome the red tape that currently limits their abilities to grow and scale.
3. Cannabis enthusiasts can benefit
For a long time, the fight for the legalization of cannabis has been championed largely by common people, medical cannabis users, cannabis advocates, celebrities, and others who were on a mission to educate the relevant quarters about the value of cannabis.
It was these enthusiasts who championed enlightenment campaigns on the value of cannabis to our emotional stability as a de-stressor without the negative side effects like violence, aggression, hangovers, and potential for poisoning that exist with alcohol.
Some of these people have put their money where their mouth is. Notably, the American Hip Hop legend, Snoop Dogg started his Cannabis-based businesses in 2018, but not many others have had the opportunity to, until now.
Crowdsourcing has opened a huge door for investment in the industry for enthusiasts who would love to make a little money from their loyalty to the cause or just for the business person who recognizes the huge opportunities in the market.
With crowdsourcing investments, investors are making investments in a sector that has not even approached the demand levels and that need funds to fulfill a constantly growing demand.
The returns are more likely than in many other sectors, especially when the growers accepted by these crowdsourcing platforms are properly scrutinized to ascertain their legality and the suitability of their business models and processes.
Crowdsourcing platforms are adopting different investment models, but short-term reward-based crowdsourcing remains undoubtedly the dominant version and tends to house a much higher proportion of creative jobs than just equity or advance crowdsourcing.
Juicy Fields, a Berlin-based crowd growing platform has experienced increased profits with this model by consistently delivering on their promise of 90 days between investment and returns. Juicy Fields amongst others offer an investment opportunity not just to enthusiasts and investors, but also to Cannabis-based businesses at the other end of the industry; packaging, medical and delivery services.
4. An international cannabis industry
For so long we have had nation-based fights for cannabis, we have also had countries with wholesome legalization like Canada and Luxembourg as well as nations with partial or haphazard legalizations like the US and then we have the myriad of European countries with no legalization yet.
To a large extent, the fractured nature of the fight for Cannabis has been the reason for its slow development. Crowd growing campaigns have probably unintentionally created a platform that strengthens the industry by bringing together international growers and investors, to contribute to the business we all love.
The international appeal of the crowdsourcing platforms like Juicy Fields among others is one that is quickly being emulated by other platforms and one which is likely to strengthen the industry in the long term. Businesses that build a strong international linkage and strength often develop more influence in the individual nations where the businesses are situated.
Crowdsourcing, if properly developed, may be the thing that speeds up the legalization processes in the U.S. and Europe.Crowdsourcing may be an innovation in the industry, but considering the success of similar models in other industries and the exceedingly beneficial effects already experienced in the cannabis industry, there is no reason to not be excited at the potentials it presents.