What Kind of Marijuana Business Do You Want to Start?

By Paul Ausick Updated Jan 13, 2:08AM EST · Published Oct 20, 1:10PM EDT

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Coming votes in nine U.S. states could greatly expand the marijuana industry in this country. The most populous state, California, and Massachusetts, with the 14th-largest population, could very well approve recreational marijuana use in the coming election. Those two states alone account for more than 45 million Americans. Add in Arizona (6.6 million), Nevada (2.8 million) and Maine (1.3 million), and more than 55 million people will join more than 15 million who live in states where recreational marijuana use is already legal.

And we’re not even looking at states where medical marijuana is already legal or will be voted on in November. Demand for both the plant itself and a variety of other products and services to support growers, wholesalers and users could skyrocket.

Until now, most investment in businesses in the marijuana industry were ancillary to handling cannabis itself. But that, too may be about to change.

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Giadha DeCarcer, founder and CEO of New Frontier Data, commented:

It is notable to see investors’ appetite is now broadening beyond just ancillary services where there has been less stigma and risk attached in the past. With the cannabis industry forecasted to grow at a compound annual rate of 29% over the next four years, making it one of the fastest growing industries in the U.S., investors are now open to exploring any opportunity in the sector whether it touches the plant or not.

According to New Frontier and its partner Arcview Market Research the majority of potential investors in the cannabis industry, 68%, are now interested in both sides of the market. The highest proportion of investors are interested in ancillary commercial products (62%) and nearly half (46%) are interested in non-flower products. Cultivation facilities are the third-largest area of interest (38%), especially in markets where regulation is stiff and restricts competition.

Other insights from the 2016 Cannabis Investor Study include the following:

Investors are most interested in the ancillary commercial products followed by edibles and infused products.

Nine in ten investors are interested in medical and adult use markets

At the state level, interest is highest in California (57%) and Colorado (37%)

64% of investors expressed interest in the Canadian market

Preferred stock is the favored deal structure for 76% of Arcview Investor Network members, followed by convertible debt at 73%.

65%of investors made their first investment in 2014 or later, and 71% expect to invest more in 2016 than they did in 2015.

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About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.