When it comes to investing in legal cannabis, there are three important tips to know, and having Electrum Partners on your side can help navigate the way:
- Establish a path to liquidity – then maintain it
- Legalization is coming and sooner than you think
- Compliance, compliance, compliance!
The Path: So you’ve made an investment in a start-up in the legal cannabis industry and made sure they that are closely following all of the regulatory compliance required. Is there a problem? Only if you lose focus on the end goal of liquidating your investment position to make a profit. The bottom line is, legal cannabis is a fast-moving industry within a highly fragmented marketplace so it is critical to be well prepared for anything. Electrum Partners works to ensure that your path to liquidity is reasonable and achievable. Our firm provides in-depth, independent company evaluations that provide insight and guidance for your cannabis related investment opportunities.
National legalization: Tax revenues from legal marijuana sales have bolstered the budgets of states like Colorado and Washington. Breakout sales in Nevada have already generated $30 million in tax revenue in the Silver State while tax revenue for California is projected to be 1 Billion in 2018. Government officials in non-legal states will be compelled to adopt legalization in order to capture the windfall in tax dollars. Colorado, Washington and Nevada have all directly benefited from the boost in budgets for infrastructure, public education, law enforcement and overall cash infusion into their general funds. For these reasons and more, we at believe that cannabis (particularly medical) will legalize nationally in the US within the next five years.
Compliance: Be sure that you are comfortable with how each business in your investment portfolio meets the regulatory burden placed by the state and local municipality. New laws and ordinances are passed every day, often without much news coverage or fanfare. In legal cannabis, you have to stay on top of it. Changes to the laws emerge suddenly, and ignorance of the regulatory frameworks is no excuse. Companies out of compliance may suffer stiff fines, reputational damage, and in many cases are shut-down completely. By aligning yourself with industry experts like those at Electrum Partners, you don’t have to become an expert in every geographic-product space mix.
Contact us to vet your investment opportunities today!