The marijuana industry remains mostly in the shadows, however, the passage of medical marijuana legislation in 23 states and of recreational marijuana laws in four states is attracting the attention of private equity investors, high Net Worth investors as well as individuals making the investment class a part of their overall, weighted investment strategy. Having these different investment groups simultaneously and actively investing in cannabis is an important step in the evolution of the marijuana industry from emerging to developed.
The legal marijuana industry is estimated to be worth between $2 billion and $3 billion. As of January 2015, 23 states, including California and the District of Columbia, have legalized medical marijuana. Four other states also allow recreational marijuana use (Colorado, Oregon, Washington and Alaska). History will show that 2014 was a transformative year for the industry .
Despite states’ efforts to legalize medical or recreational cannabis, its use is still illegal under federal law and opponents are many in Washington. For example, an assistant U.S. attorney wrote in a court filing last week that marijuana is a psychoactive, addictive drug that is not accepted as safe for medical use.. The good news is that recent legislation bars the federal government from interfering with state medical marijuana laws. But the reality is that legal concerns, along with the drug’s social and political baggage, are factors that keep investment capital on the sidelines. But with California voters likely to see a ballot measure to legalize recreational marijuana in 2016, more venture capital deals could be on the horizon.
Among the safest of the cannabis investment train is real estate. Growers, dispensaries, laboratories all require real estate, either in long term leases or as acquisitions. Generally, the receipts that are generated from cannabis sales and production activities help to afford rent and mortgage payments at approximately 110% of market numbers; though quickly coming to an end, cannabis operators continue to pay a premium for a safe place to conduct their business.
The lack of educated and agreeable real estate professionals, as well as providers (sellers) of the real estate, has created a bottleneck of available space in all states where cannabis is legal. Debtcraft regularly reviews real estate capital requests by cannabis operators and provides funding for acquisition, construction, tenant improvements—including the unique hardware and fixtures associated with cannabis
Debtcraft has high expertise in the real estate component of the legal marijuana industry. We are always looking for joining smart and savvy ganjapreneurs looking for real estate debt or equity.
Investing in marijuana technology can be very exciting since the industry is rapidly looking for ways to better serve the community…a variety of technologies are well worth looking at, including testing devices and technology aimed at identifying the quality and character of the various strains that are being promoted for specific applications. Other technologies include delivery devices, extraction equipment and techniques as well as cultivation technologies that address inefficiencies in lighting and power use, exhaust and clean air requirements
Start Up Capital
Investing in this area can be very exciting, since often times the corporate sponsor has a very specific request in mind and provides a full and complete analysis of where the capital is going be deployed. Seeing a company grow from an idea and quickly ramp up and have true earnings is fun to be a part of. This form of investment tends to be Venture Capital or Private Equity (P.E.). DEBTCRAFT is also well versed and experienced at sourcing quality investing opportunities for start-ups or distress relief as well as providing a predictable source of capital. Debtcraft provides interim, initial startup, gap and distress relief capital using its own capital and the capital of a variety of private investors familiar or eager to be involved, with the cannabis explosion.
Debtcraft originates legal cannabis related capital requests for high quality people. We will do capital extensions as low as $100,000 and as high as $5,000,000.
Being involved with pink sheets and a lower graded trading platform can be hazardous, especially in the Marijuana sector. Each week there is a new canna stock being promoted—absent any real product or service. In recent years, share values at many of these newly created firms opened rock bottom low and running up to 40 times their opening. Very common to see these large and steep increases and declines on companies still attempting to generate minimum revenue. Despite being difficult to assess valuation due to lack of earnings, cannabis investing opportunities can provide high yields where the underlying fundamentals such as management, capital reserves, IP/other owned assets are under ownership.