As marijuana continues to roll towards full legalization across the globe, private equity firms with deep pockets are piling into the cannabis bandwagon.
In a report by The Business Insider, a new crop of equity firms including Tuatara Capital, Seventh Point, and Poseidon Asset Management are in on the cannabis biz and eager to help generate a return on investment. With the traditional banking industry out of reach for nearly all cannabis-related businesses, this flood of private investment could a loud wake-up call for the big banks.
Retail sales of legal cannabis in the US are estimated to reach $4.3 billion this year, with some estimates predicting the industry will generate up to $22 billion by the year 2020.
Current optimism for the sector and its continued legalization, coupled with healthy estimates moving forward, have been the catalyst for investors with significant funds to act. Marijuana Business Daily’s 2016 Factbook reports that 47% of active investors in the cannabis space are planning on investing $10 million or more into private cannabis companies.
Business Insider revealed that Seventh Point, named for the seven points on a marijuana leaf, is working to complete $75 million worth of fundraising for 2016. The company’s CEO, Steve Gormley, said Seventh Point raised more money than was intended on their first two funds. Gormley has fifteen years of experience in the private equity industry and added: “I haven’t seen anything like this in my career.”
Gormley continued by mentioning that originally, investments in cannabis companies were made from within the industry. However, now that weed has a proven track record, firms like Gormley’s are seeing a flood of investors reconsider their objections to the marijuana industry.
Internationally, marijuana is seeing a new dawn with countries like Canada working to legalize recreational pot next year. Others such as Colombia, the Czech Republic, Romania, and France have loosened their stance on cannabis, and many more are expected to follow. No doubt, as the world finally realizes that cannabis is the exact opposite of what prohibitionists have reported over the last few decades, investments will come in Euros, Pounds, Lira, Bitcoin, and every other currency imaginable.
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