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May 2018

What No One Told You About Cannabis Investing

Investing in marijuana isn’t as simple as many would have you believe. There are many factors that current and prospective investors overlook. You need to be aware of these factors if you want to turn a profit.

Marijuana is Illegal Worldwide

Despite the statistics above, marijuana remains wholly illegal at the federal level in the United States. It is categorized as a Schedule I drug and is considered to be highly prone to abuse, with no recognized medical benefits. In fact, Uruguay is the only country to legalize cannabis; however, more than two dozen countries have implemented broad medical cannabis use laws, including Canada and Mexico.

There are Ways to Get Financing 

Through common stock offerings and bought-deal offerings, financing can be secured. Both methods increase the outstanding share count for a publicly traded company, lowering the value of each existing share of stock.

U.S.-Based Cannabis Businesses Pay Exorbitant Tax Rates 

Marijuana businesses in the U.S. that turn a profit face a tax code (Section 280E) that disallows businesses that sell a federally illegal substance from taking normal corporate income-tax deductions. Without these deductions, a weed-based business can face a tax rate of as much as 90%.

There is one approved federal grow facility in the U.S. 

There’s currently one approved federal grow facility in the U.S. at the University of Mississippi meaning the supply for clinical testing is limited and comes with a lot of regulations.

The FDA may approve its first cannabinoid-based drug approval 

The Food and Drug Administration (FDA) appears to be less than two months away from giving the thumbs up to the very first drug derived from compounds found in the cannabis plant (known as cannabinoids). GW Pharmaceuticals’ (NASDAQ: GWPH) Epidiolex, which is designed to treat two rare forms of childhood-onset epilepsy.

Trump is for states’ rights

Recently, Trump stood behind the right of states to choose whether to legalize cannabis, But we shouldn’t forget he also shut down Israel’s attempt to export medical weed to the U.S. earlier this year.

Few countries are authorized to export cannabis 

Canada, and the Netherlands are one of just two countries that actively export cannabis to countries that legalized medical marijuana. In addition, Australia is expected to enter the cannabis exports soon.

Canopy Growth Corp. is the industry’s biggest player

Canada’s Canopy Growth Corp. (NYSE:CGC) announced last month that with recent licensing approvals from Health Canada, it had 2.4 million square feet of licensed grow space. Canopy Growth expects to have 5.7 million square feet for production eventually.

Oversupply is a concern 

Canada is expected to legalize recreational weed by this summer; however, this may lead to overproduction. Exports are the main factor here. If foreign countries gobble up all of this excess supply, margins won’t be affected, but if not, oversupply could cause legal weed prices to lower.

Most pot stocks trade on the OTC exchange 

Investors should also be aware that most marijuana stocks are listed on the over-the-counter (OTC) exchange, making liquidity a challenge.

Profitability is minimal, in most cases 

Cannabis businesses themselves may not be anywhere near as profitable as the cannabis investors.

This article should not be an end to your cannabis research. If you are serious about investing, you must take the time to thoroughly understand the market. Above are just a few of the things that get overlooked when cannabis investments are brought up.  With every investment or business venture, you must realize there is risk involved, the list above just highlights some of the pros and cons of marijuana investments.

 

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3 States to Watch This Year

Thirty states plus the District of Columbia now allow legal use of medical marijuana. In addition, eight of those states, along with D.C., have legalized recreational use of marijuana. It looks like those two numbers are about to grow.

Two states are posed to legalize recreational marijuana in 2018 while another state could soon join the ranks of those allowing legal use of medical marijuana.

1. Michigan

Michigan currently allows patients to use medical marijuana, but it may soon approve recreational use of marijuana as well.

The Michigan Board of State Canvassers gave its stamp of approval on April 26, 2018, on an initiative to put recreational marijuana legalization on the ballot later this year. Supporters needed to gather 250,000 signatures; they ended up with over 100,000 more signatures than needed.

States like Michigan are considering allowing recreational marijuana for its higher tax revenue. The proposed ballot measure would legalize possession and sale of up to 2.5 ounces of marijuana for recreational use if passed. All recreational marijuana sales could be taxed at an additional 10% on top of Michigan’s current 6% sales tax. This revenue could be used to fund education, roads, and cities and counties with marijuana-related businesses.

However, that legalization of recreational marijuana is guaranteed to be on the ballot when voting takes place in November. The state legislature may pass a bill to legalize recreational marijuana even sooner because the Republicans currently in control of Michigan’s legislature want to boost their chances of maintaining their majority.

2. New Jersey

It was clear a year ago that New Jersey could be considering legalizing recreational marijuana when a candidate for governor Phil Murphy publicly voiced his support for legalization.

Murphy is now governor of New Jersey, and his party controls the state’s general assembly. Gov. Murphy is promoting a bill that would legalize recreational marijuana in his state. He even included additional taxes from recreational marijuana sales in his proposed budget for New Jersey’s next fiscal year, which begins on July 1. However, the road to recreational use hasn’t been easy.

Some members of the democratic party are opposed to legalization, as well as most Republicans in the state assembly. Public polls have also shown that New Jersey residents have mixed views on allowing legal use of recreational marijuana.

3. Oklahoma

Oklahoma has no laws allowing legal use of marijuana for either medical or recreational purposes. However, it does have a law in place allowing medical use of cannabis extracts that have high levels of cannabidiol (CBD) and low levels of THC (the primary psychoactive ingredient in marijuana).

This could change on June 26. Oklahomans will vote that day on State Question 788, which proposes legalization of medical marijuana and the establishment of a state system to tax and regulate its use.

Polls taken earlier this year show that the majority of Oklahomans support the proposal in State Question 788. Additionally, a group called Green the Vote is gathering signatures to include State Question 797, which would legalize recreational use of marijuana, on the ballot in November.

Each of these states could add new cannabis investment opportunities to the marijuana industry and provide wonderful opportunities for business development, especially for minority businesses, which have previously been overlooked. In the months to come, those serious about cannabis investing should watch these states closely as they begin entering the market.

 

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The Three Things Women Need to Before Entering the Cannabis Industry

You’ve heard it a million times the cannabis industry is the fastest growing industry in the United States. The fact that this has remained true for so long, should inspire you to take action because it’s a standing promise. The industry does have its risks, but it’s important to recognize that now is the time to invest in an industry that has a large potential for growth and could help minority businesses level the playing field.

Currently, 29 states have legalized some form of medical marijuana and allow doctors to prescribe it to their patients. Arcview Market Research with BDS Analytics, publicized a report in 2016. The report predicted that as more legal markets become active, the entire legal cannabis market will reach $24.5 billion in sales, a 28 percent annual growth rate, by 2021.

This is creating many jobs across the U.S and hundreds of cannabis products and services. Many of these products and services are specifically aimed at women consumers. Women could easily make a cannabis investment that would allow them to guide America’s medical marijuana in the right direction.

Hard-working women in the industry provide the following three tips for women looking at cannabis investing.

Be Genuine and Engaging

As more money floods the market, it’s critical for businesses to be authentic and genuine in their communities.  This starts with valuing the customer. Many women-owned businesses are modifying products and services based on honest feedback from their consumers. The can do this by creating real conversations and interactive experiences around their brands.

Interacting with consumers on social media is another way to build an inclusive and community-led fan base while keeping followers up-to-date.

Be Knowledgeable

It’s also important for you to stay up-to-date with the latest research, insights and facts. For example, a Cannabis Consumers Coalition’s (CCC) report released last year found that more women were consuming marijuana than men, 58 percent to 42 percent. This means you should be looking at women as a potential target audience for content and marketing and find ways to appeal to their needs and wants.

Consumer reports, new research, and data on the medicinal properties of cannabis is essential information that can add to your skill set and knowledge of the market and help you make better executive decisions. Armed with these facts you will be able to understand your market better, and you’ll be well-equipped to tackle debates in favor of cannabis legalization.

Be Innovative and Have Confidence

The cannabis market is a new and innovative market, which encourages out of the box thinking and bold leadership. Being self-aware, understanding precisely what you bring to the industry and having the confidence to follow through will do more for your business than almost anything else.

Now is the time to join the cannabis community. The possibilities for success are virtually endless and women stand as front-runners if they are willing to take the necessary steps. Above are just a few tips from women in cannabis today, who are ready to build a united feminine front in favor of cannabis.

 

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In the Battle of the Sexes Size Doesn’t Matter

It’s obvious that men own and operate more businesses than women. In fact, women-owned businesses are still categorized as minority businesses. However, a recent study conducted by FitSmallBusiness.com, an online business publication. Shows that regarding revenue and job creation rates women are in the lead.

Men own over 75% of businesses, but the recent study shows the women tend to be more effective leaders, create more jobs, have a larger appetite for growth, and significantly improve startup company performance.

This study was compiled through research and analysis of data. Through this thorough analysis, FitSmallBusiness.com concluded that there are five reasons why women entrepreneurs are more successful than male entrepreneurs.

Female-Owned Firms Generate Higher Revenues 

According to FitSmallBusiness.com “Womenable, a social enterprise firm focused on women’s entrepreneurship, analyzed the growth trends of male- and female-owned companies from 1997-2014, and found that businesses owned by women saw a 72.3 percent growth. Male-owned firms, on the other hand, grew by 45.1 percent over the same time period.”

Female-Owned Firms Create More Jobs Than Their Male-Owned Peers 

The Census Bureau found that the number of U.S. employees that worked at businesses owned by men grew by 0.37 percent from 2007 to 2015 while the number of employees at women-owned businesses experienced an 18.39 percent growth from 2007 to 2015. In total women-owned businesses created 1.24 million more jobs than their male counterparts, despite a fewer number of business total owned by women. This is because women businesses experienced a 20% growth rate during that time, while the male business growth rate was 4.86 percent.

Women Executives Significantly Improve Startup Company Performance 

Women don’t have to own an entire business to create such astounding effects. First Round, a seed-stage venture firm, found that having a woman co-founder can help companies perform better in return investments than companies that have only male founders. In fact, Dow Jones VentureSource conducted research that shows that more female executives in a company correlate with higher success rates.

Women Are More Effective in Senior Leadership Roles 

According to CEB, a research company, strong leadership results in double the revenue of businesses with weak leadership. Another study conducted by Harvard Business Review shows that women are often stronger leaders than men. In fact, “The research provided hard data on the key competencies that top leaders should exemplify. Out of 16 leadership competencies, which included problem-solving, driving for results, and collaborating with others, women scored higher than men in all but one.”

Effective leadership is a driving force for productivity and attract highly talented professionals, which lead to higher revenues.

Women Have a Larger Appetite for Growth

A BizWomen survey of 1,366 business owners proved that 32 percent of female-owned businesses are in active expansion mode versus 27 percent of businesses owned by men.

Women are more interested in expansion, and they are also more likely than men to start new ventures. A Centre for Entrepreneurs study showed that close to half of women polled plan to start another business within the next three years, while just 18 percent of men were planning on starting a new venture.

The FitSmallBusiness.com study clearly shows the power of a minority-owned business. It seems that we often overlook these businesses’ power and potential, which could be unlocked by embracing true diversity. Women-owned businesses are just one example a minority business type that could lead to growth in several ways. It’s time we recognize the strengths of all peoples and realize that in terms of success size really doesn’t matter.

 

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