DISTRICT OF COLUMBIA: New Frontier Data, in partnership with Arcview Market Research and The Arcview Investor Network has released its 2016 Cannabis Investment Study. The study unveils insights from Arcview’s members and shows that despite the differences in regulations affecting businesses that touch cannabis and ancillary businesses that do not touch cannabis, the majority of investors (68%) are now interested in opportunities on both sides of the market.
“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 compounded 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,” said New Frontier Data CEO and Founder Giadha DeCarcer.
“The Arcview Investor Network is, by far, the largest single source of deal flow in the fastest growing industry in America and the largest single group of investors placing capital in the sector. We were honored to be the focus of the first ever deep-dive study on actual investor’s attitudes and actions so far. There are many interesting insights in this report that could have far reaching impacts for entrepreneurs raising capital and other investors considering placing bets in this sector,” said Arcview Group CEO Troy Dayton.
When looking at the industry’s specific verticals, the highest proportion of investors were interested in ancillary commercial products (62%). Nearly half the investors (46%) were interested in non-flower products, reflecting the very strong growth in consumer demand for edibles and concentrates over the past few years. Cultivation facilities, which are the third most popular investor focus (38%), are especially attractive in markets that tightly limit the number of grower licenses. Other areas, including industrial equipment, hemp and consulting services, were of interest to a smaller group of investors, reflecting the more limited opportunities and the specialized business expertise required for those sectors.
Other key insights in this report include:
- 65% of investors made their first investment in 2014 or later, and 71% expect to invest more in 2016 than they did in 2015.
- Nine in ten investors are interested in medical and adult use markets, but only 36% are interested in CBD-only markets.
- At the state level, the two markets investors are most interested in are California (57%) and Colorado (37%).
- However, looking globally, 64% of investors expressed interest in the Canadian market, (a higher level of interest than was seen in any individual U.S. state market).
- Preferred stock is the favored deal structure for 76% of the investors, followed by convertible debt at 73%. Public stocks were the least preferred investment approach.