Cannabis investment and license values ​​are rising

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The cannabis industry continues to grow rapidly in the United States, and all eyes are on the industry’s potential for investors. Today, investment interest comes not only from people looking to invest in stocks of publicly traded companies, but also from individuals, groups, and companies looking to invest and license capital in cannabis companies.

How people invest in the cannabis industry

By mid-2021, we’re on the verge of reaching the tipping point where half of the states across the country will legalize adult cannabis, so it’s not surprising that investment opportunities are a hot topic. Three of the most important ways people and companies are investing in the industry today are through acquisitions, equity financing, and stocks. Let’s take a closer look at each one.

Acquisitions

Multistate operators and larger corporations have been eagerly acquiring brands with high growth potential to bolster their presence across the country. When interstate trade is finally allowed, these companies will be able to grow exponentially and very quickly.

Mergers and acquisitions take place between big players that create industry giants, as well as through smaller deals that give companies a foothold or expanded presence in certain markets.

In the past month alone, Cannabiz Media customers who purchased the business intelligence product received news of a dozen mergers and acquisitions by US cannabis licensees. You can see an excerpt of these messages in the picture below.

Schedule a demo to see what M&A and industry news you can access through Cannabiz Media’s business intelligence product.

SOURCE: Cannabiz Media Business Intelligence | www.cannabiz.media

Capital financing

Large venture capital firms, institutional investors, and individual investors are looking for licensed companies with strong growth potential to break into the U.S. cannabis industry. Today there are even very successful cannabis capital advisory firms working with investors to help them find the best opportunities.

What was once an industry feared to invest large sums of money in has become a market where the who’s who of investing is actively looking for their next big win.

In the first quarter of 2021, Crunchbase invested $ 357 million in capital investments in 29 companies. This only included seed, venture and private equity in venture-backed companies.

Stocks

A handful of cannabis companies have gone public, and while they have not yet made money for investors, there is hope that the growth trajectory of the industry will bring positive returns in the not-too-distant future.

According to a study by MJBizDaily, 82% of global investment in the cannabis industry in 2020 went to publicly traded companies. It is very early in the life of the industry, and many investment analysts believe now is the time to buy a strategic selection of stocks in cannabis companies or invest in a cannabis mutual fund.

Jon DeCourcey, equity research analyst at Viridian Capital Advisors, recently told Greenstate that the key to success is connecting a new industry to traditional investment approaches rather than theoretical projections of what might be.

What affects the value of cannabis licenses

There are a variety of factors that analysts use to determine the value of a cannabis license, not least the potential market size, especially in states where adult cannabis is legal.

Aside from the usual criteria for evaluating a company, the application of a value to a particular cannabis license is as unique as the cannabis industry. For example, intellectual property, including patents and trademarks, can add significantly to the value of a license, as can real estate, location and security, and more.

A few things to keep in mind – the top factors cannabis company investors are looking for, according to research by MJBizDaily:

• Experience, qualifications and strength of the management team: 67%
• Potential level of return on investment: 56%
• Detailed and realistic business plan: 44%
• Historical financial data or performance: 33%
• Potential of the company and its role and awareness in the industry: 33%
• Proforma financial metrics: 22%
• Schedule for the investor to get a return on their investment: 22%
• Strength of the company’s defensible assets, such as its intellectual property or equipment: 11%

Key insights into cannabis investments and license value

Any cannabis business license holder looking to add value to their license in the minds of investors should focus on meeting investor expectations based on the data we have that explains what to expect from investment or acquisition goals.

Remember that as a subscriber to the Cannabiz Media License Database, you can connect with license holders. Schedule a demo to see how you can use it to grow your business or investment portfolio.