The numbers are from the 2016 Cannabis Investment Study, released by New Frontier Data, which specializes in cannabis Big Data and analytics, in partnership with Arcview Market Research, a publisher of cannabis market research, and The Arcview Investor Network, a private forum for high net worth accredited investors.
“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,” said New Frontier Data CEO and Founder Giadha DeCarcer. “With the cannabis industry forecasted to grow at a compounded annual rate of 29 percent 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.”“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,” said Arcview Group CEO Troy Dayton. “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,” Dayton said.
When looking at the industry’s specific verticals, the highest proportion of investors were interested in ancillary commercial products (62 percent). Nearly half the investors (46 percent) 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 at 38 percent, 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 study include:
• 65 percent 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 percent are interested in CBD-only markets.
• At the state level, the two markets investors are most interested in are California (57 percent) and Colorado (37 percent).
• However, looking globally, 64 percent 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 percent of the investors, followed by convertible debt at 73 percent. Public stocks were the least preferred investment approach.