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Most investors and entrepreneurs agree that the cannabis market will offer enormous growth potential in the coming decade. At the same time, this emerging industry leaves many people with questions that they rightly want answers to before investing.
That’s why I want to break through some of the forces affecting the cannabis market, things to look for, and why I, like many with their ears to the ground, believe that the cannabis industry is (for the most part) a safe gamble is long term. However, this is still a belief and not financial advice.
Related: Don’t Invest In Legal Cannabis Until You Read These 5 Tips
Public sentiment and the cannabis market
For decades, Americans were told that cannabis was much more dangerous than it is. (The reasons for this are complicated and worth discussing, but a little too much to talk about today.) Moreover, this sentiment spread from the United States and many other countries took the same stance.
However, public sentiment about cannabis is starting to match reality. In the United States, people are push for legalization, and many states allow the sale of not only medicinal cannabis, but recreational cannabis as well. Some politicians and communities are opposing this change, but it now seems inevitable that the US will continue to legalize cannabis alone. Believe it or not, my home state of Mississippi is the 37th state to legalize a medical cannabis program without strict restrictions, opening the doors to a new wave of economic expansion.
This change doesn’t just apply to the US either. Global news is important to understand this market, and many countries are on the same path as the United States.
Competition in the cannabis market
The US cannabis industry is valued at $61 billion and rising. While the pandemic complicates the data somewhat, it’s clear that US usage is growing and companies are striving to meet demand.
What should be noted for those who are interested in? investing in cannabis is that not this new ones news. Many players, big and small, have already jumped into the industry for you. California legalized cannabis around 2016 and Colorado legalized it in 2012. At the same time, that doesn’t mean it’s too late to invest.
Some purchases in the cannabis stock market offer a lot of potential as long as you do your due diligence. Growth seems inevitable in the sector, at least as long as there are more states to legalize and create economic hot zones. Eventually an equilibrium can be reached, but for now pay attention to the news about cannabis and related industries.
If you’re planning to work in the industry yourself, it’s important to keep an eye on the competition in the location where you’ll be establishing yourself. One possible idea is to look at states that are close to legalization and jump in as early adopters as soon as they do. The disadvantage of such an action is that as part of the first wave you have to push a new market, which may come with its own problems and limitations.
Mississippi, for example, is gearing up for a deluge of business license applications, but the Department of Revenue and Department of Health are still editing and changing their regulations for operating within the state. Due to the fluid nature of implementing a new program, it is important to be active within the community and find local resources to help navigate the system.
Related: There are still plenty of untapped opportunities in cannabis
Cannabis technology and innovations
As the cannabis industry moves out of the black and gray market world, innovation and technological advancements are inevitable. We’ve already seen big news about the potential medical uses of cannabis. For example, it has been shown that help with epileptic seizures and has been known for some time for helping people with chronic pain.
Potential technology and innovation however, go beyond medical advances. As cannabis “becomes legitimate”, so to speak, we will see companies racing to find ways to save on growth, transportation, storage, packaging, production and more.
This is a double-edged sword for entrepreneurs. On the one hand, these innovations can reduce costs and provide growing opportunities for profit. On the other hand, small businesses may have to compete with large companies that can afford to innovate at scale in ways that smaller stores never can.
In general, the global cannabis market will see a lot of growth as big and small players get into R&D. Investors and more active entrepreneurs should also watch out for the big competitors. As in any new industry, many players will storm the market, which will later be ousted by bigger and/or smarter players.
While it may be tempting to focus solely on its unique factors when considering the potential of a particular industry, being too short-sighted can be a mistake. Instead, consider the economic landscape as a whole.
For example, April 2022 marked the steepest four-month decline in the S&P to start every year since 1939! As you might imagine, this impacted cannabis stocks along with many others. Watching shifts like these can provide an investor with opportunities to buy into a deal and stick with it. Then you can benefit not only from the correction, but also from the growth that we think this sector is ready for. Again, we hope this is the case, and people say that “long term investments almost always outperform the market when investors try to time their positions”, but this is not financial advice.
People who want to get directly into the industry should be even more careful to catch important economic factors. After all, it might not have made sense to open a high-capacity physical location when that market’s trend curb and delivery post-pandemic.
Related: 4 Ways to Achieve Longevity in the Cannabis Industry
The cannabis market has a lot to offer and seems poised for major growth. However, not every business will succeed, and not every opportunity related to cannabis will be created equal.
The cannabis industry has grown and continues to grow at a rapid pace. As the industry matures and legalizes more products, more opportunities will arise for those willing to learn and adapt. At the same time, it is important to always be aware that a particular business or opportunity may fail. This is the nature of investing, and you have to rely on your own judgment to determine which companies are worth investing in. While many cannabis stocks and opportunities look promising, it is essential that potential investors do their own research.