California’s cannabis industry is piquing the interest of investors.

Since complete cannabis legalization went into effect on January 1, 2018, the state has been building a wealthy and attractive legal cannabis market.

With a mature medical cannabis industry that saw its beginnings in 1996, an evolving cannabis culture and a population of 39.78 million in 2017 (1), is it any wonder why investors have got their eyes on the Golden State’s pot pie?

Yes, the future looks bright (and very green) for California, which boasts the biggest recreational cannabis market on the planet.

According to the Marijuana Business Daily Factbook, California expects to generate $500 million in recreational cannabis sales this year. Furthermore, researchers predict recreational cannabis sales will turn over more money than medical cannabis sales by 2022. (2)

Although cannabis is a surefire moneymaker for investors, California’s world of weed must be properly analyzed if investors wish to make a lucrative move.
California is the epicenter of the United States cannabis market

It boasts the largest state economy in the United States and is number six on the list of the world’s biggest economies.

If we look at things on a global scale,the legal cannabis market in California is forecast to hit $31.4 billion by 2021. This is based on the findings of a report from Brightfield Group. (3)

Currently, the US cannabis market accounts for $7.7 billion of the world’s annual sales. (4) Since the Golden State generates almost half of the nation’s cannabis sales, it is a proactive spot for investors to plant a seed that could, quite possibly grow a forest. Areas of investor interest include cultivation, packaging and labeling, production, strain development, and more.

CEO of Helix TCS Inc., Zachary Venegas, says that California’s medical cannabis market is as big as Colorado, Washington and Oregon’s cannabis markets combined. “No profit minded professional would prudently ignore such a market, but one must be mindful that this unique sector is rife with complex legal and regulatory risks,” says Venegas. (5)

Mitigating Risk When Investing in a Cannabis Company

The appeal to invest in California’s cannabis market is very hard to resist. Nonetheless, it doesn’t come without complex legal and regulatory risks. Let’s say, for example, the federal government chooses to shut the cannabis industry down. In this scenario, action would be fought by states, citizens and corporations. As a result of this, ongoing litigation would cause industry delays.

Investors should not solely depend on a cannabis license to procure wealth, either. Venegas says that people’s views on the subject are “flawed”. “Many people assume that having a license to operate a cannabis dispensary is a golden ticket to automatic riches,” says Venegas. (6)

He is a firm believer that success and riches are closely tied to two main influential factors: supply and demand.

So, what risk mitigation strategies can be carried out when investing in California’s cannabis industry?

Well, patient cannabis investors who execute smart, strategic and sound business practices stand a good chance at reaping much more than what they sow. Aim to find a company that already implements more than one strategy to dominate the cannabis landscape in California. Secure investments are essentially guaranteed if you scope out companies with a cornucopia of acquisitions, partnerships and products, and a true method of distribution into the market.

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