- September 15, 2017
- Posted by: admin
- Category: Buying a Business, Economics
No pun intended, but marijuana businesses are a huge growth industry ripe for potential investment. Those interested in cashing in on the rising legal cannabis industry have countless opportunities to do so thanks to the diverse businesses which support legal pot sales.
The effects of increasing marijuana legalization clearly point to economic benefits for everyone involved. Colorado, which has the most mature recreational market in the U.S., saw a 25 percent year over year sales jump in the first six months of 2017. In turn, the state collected over $500 million in tax revenues during the same period. Other markets, in the increasing number of states with legal marijuana sales, tell the same story:
- unparalleled demand
- diversifying business models as the industry matures
- unheard-of returns on investment.
As a certified business broker in Las Vegas, Nevada, I have never seen more investment opportunities at one time with a higher promise of growth. Anyone interested in expanding their portfolio would be wise to take a serious look at purchasing a marijuana business, especially within the expanding market for peripheral services.
If you’re not yet convinced, consider the five huge reasons marijuana businesses are becoming a great investment below.
1) End-consumer Growth Potential from Constant Demand
U.S. adults overwhelmingly seem to enjoy marijuana. Whether for medical or recreational reasons, 13 percent indicated that they smoked cannabis in a recent Gallup poll, and over 40 percent said they’ve tried it.
In Nevada, the opening of recreational sales to all adults over 21 sparked a huge boom in demand. One store in Las Vegas had 50 people lined up before opening the next week after sales went legal. Store employees estimate they helped at least 1,000 customers each during the first two days of legal sales.
Demand is growing among U.S. adults, too, showing promise for “pot tourism” in already-popular destination cities like Denver and Las Vegas. Marijuana use nationwide more than doubled from 2002 to 2012, and easier access will no doubt cause use to expand even further. In fact, marijuana demand is bigger than the demand for ice cream.
2) Marijuana Business Services Growth Potential as the Industry Matures
The marijuana industry consists of more than just growers and dispensaries. Dozens of other business types — from logistics to security to hydroponics supplies — sprout up around these start and end points. As the industry matures, even more business models could arise, such as specialty marijuana-only marketing or financial companies.
In many markets, gaps in services are glaring. After the huge boom in sales for Nevada marijuana businesses following legalized recreational cannabis, sales plummeted between 20 to 30 percent. Why? There aren’t enough distributors yet. Anyone willing to obtain a license and enter the market will find instant demand from businesses willing to pay top dollar for more reliable service.
Other services the industry creates are only peripherally related to marijuana sales. In Colorado, for instance, many dispensary owners have turned into real estate moguls. They buy properties after securing zoning and licensing, package it all together and flip it for double or triple returns.
3) Highly Focused, Specialized Market
With industries like fashion, food and beverage and even real estate, it can be hard to predict market shifts. Once-popular business models may no longer work, and consumers may suddenly become interested in something else.
Not so in the marijuana business. Even as new concentrates and other products emerge, demand for regular dried cannabis flowers remains incredibly strong. Anyone investing in a marijuana business can therefore rely on consistent consumer demand for a product that ultimately doesn’t need a lot of processing.
Understanding this tightly focused industry therefore allows you to align your business value proposition towards definite goals rather than chasing the shifting winds of a market in constant flux.
4) Marijuana Appears to Be Somewhat Recession Proof
Demand for marijuana appears to be largely inelastic, and at least some evidence exists that marijuana sales weathered the 2009 recession with ease. In Colorado, their nascent medical marijuana program jumped 2,000 patients in a month and rose to an estimated 15,000 in 2009, during the height of the recession.
One industry expert in Los Angeles even believes that marijuana sales helped mitigate the economic damage the recession wrought. “There were reportedly over 1,200 shops open during the recession each employing bud tenders, receptionists, security guards and managers seven days a week,” he said. “There was an untold number of indoor cultivations supplying the shops, each employing cultivators, assistants, trimmers, couriers, etc. I would estimate over 20,000 jobs were created at the height of the industry.”
So, while other industries may be subject to the ebb and flow of typical market, marijuana — at least as of now — has nowhere to go but up.
5) Huge Potential for Innovation
The cannabis plant and the effects of marijuana are still being explored, leading to new breakthroughs in diverse fields every day. Everything from new hemp-based fabrics to new pharmaceuticals to new marijuana compound extraction methods are being tested in laboratories all over the world.
Anyone able to purchase a business on the ground floor of America’s upcoming marijuana boom will therefore have many diverse investment opportunities available. Strong demand means that other businesses will be flush with cash, so novel business-to-business services or new innovations will likely lead to additional growth and returns.
Get in on the Marijuana Business Boom with the Top Business Brokers in Nevada
If you are interested in tapping into the fertile market for marijuana sales and marijuana-related businesses, then do not hesitate to start working with Schwartz Strategy and Valuation, one of the top business brokers in Nevada.
Contact us today for specific advice, consulting or access to marijuana business listings and available licenses hitting the market every day. Opportunity is waiting!