[SWOT Analysis] Investing in Weed (Cannibis)

[Lane Kawaoka]

Anyone investing in Weed? Here is a SWOT analysis I did...

This is not really a hard tangible asset, however, I am intrigued by the Emerging asset class.

Now I am personally not a big proponent of smoking the thing because I feel it takes the edge you need to excel and it surrounds you with lazy people. But that's the most political I'm going to get.

Problem is investing in this stuff... most people trying to get in as operators are potheads ;)

I mean every Uber driver these days dreams of opening up a dispensary.

Where are we at in Legalization?

Its just a matter of time till Mary Jane is legalized in most states. And at ten. And most states are cool with medical marijuana.

Michigan voted for it and North Dakota against it.

Its safe to say that the social stigma that marijuana is harmful is going away.

Still, it still has the perception of attracting a bad bunch of people and still operates as a cash business. It is banned from most residential and school zones today and likely to stay that way.

What are the Tradewinds that help it?

Its big tax revenue for governments.

The risks?

The Federal Government can Trump the states.

Marijuana is still a Schedule 1 drug (LSD, Cocaine, etc) for some reason. Per Federal law, it is absolutely illegal and no prescriptions can be written for it.

I think its safe to suggest that many authorities from the DEA to local sheriffs are at odds at enforcing the changing laws as they balance the high costs to enforce it.

Speaking of Trump... President Trump will likely legalize marijuana making the Cannabis industry all but certain. Like the big banks adopting a futures market for BitCoin. After all, a low pot is coming from Canada who has the best manufacturing and growers and this would screw Mexico's drug cartels (if those walls ever get built).

Issues that operators face

• Politics aforementioned
• Difficult to get lending - some banks have an outright ban
• It's the wild wild west - similar to the Crowdfunding sites where companies are jockeying for dominance to be the eBay or Amazon of the space

Ways to Invest In Cannabis

1. Repurposed industrial space to store inventory as well as growing Cannabis
2. Buy the ETF like MJ
3. Give an unsecured loan or invest in a Fund that funds operators
4. Invest in a syndication/private placement

[Tony Kim]

Originally posted by @Lane Kawaoka:

Anyone investing in Weed? Here is a SWOT analysis I did...

This is not really a hard tangible asset, however, I am intrigued by the Emerging asset class.

Now I am personally not a big proponent of smoking the thing because I feel it takes the edge you need to excel and it surrounds you with lazy people. But that's the most political I'm going to get.

Problem is investing in this stuff... most people trying to get in as operators are potheads ;)

I mean every Uber driver these days dreams of opening up a dispensary.

Where are we at in Legalization?

Its just a matter of time till Mary Jane is legalized in most states. And at ten. And most states are cool with medical marijuana.

Michigan voted for it and North Dakota against it.

Its safe to say that the social stigma that marijuana is harmful is going away.

Still, it still has the perception of attracting a bad bunch of people and still operates as a cash business. It is banned from most residential and school zones today and likely to stay that way.

What are the Tradewinds that help it?

Its big tax revenue for governments.

The risks?

The Federal Government can Trump the states.

Marijuana is still a Schedule 1 drug (LSD, Cocaine, etc) for some reason. Per Federal law, it is absolutely illegal and no prescriptions can be written for it.

I think its safe to suggest that many authorities from the DEA to local sheriffs are at odds at enforcing the changing laws as they balance the high costs to enforce it.

Speaking of Trump... President Trump will likely legalize marijuana making the Cannabis industry all but certain. Like the big banks adopting a futures market for BitCoin. After all, a low pot is coming from Canada who has the best manufacturing and growers and this would screw Mexico's drug cartels (if those walls ever get built).

Issues that operators face

• Politics aforementioned
• Difficult to get lending - some banks have an outright ban
• It's the wild wild west - similar to the Crowdfunding sites where companies are jockeying for dominance to be the eBay or Amazon of the space

Ways to Invest In Cannabis

1. Repurposed industrial space to store inventory as well as growing Cannabis
2. Buy the ETF like MJ
3. Give an unsecured loan or invest in a Fund that funds operators
4. Invest in a syndication/private placement

 I came close to investing in cannabis via private placement syndication, but ultimately we weren't able to do so. It was an overseas based syndication and there were too many year-end tax reporting questions that weren't fully answered and it had the potential to create a lot of problems reporting wise.

I have very little doubt in my mind that this will be a very big industry in the near future so I've been anxious to gain exposure. For now I have just purchased a few different cannabis equities and plan to hold these for the next 5 to 7 years. If and when the US hopefully adopts legalization and US based cannabis syndicated deals become more plentiful, I'm sure I'll be including those in my watch list.