(December 3, 2012) – Newly relaxed laws on the use of marijuana in some American states could mean good returns for investors willing to take a bet on the drug, an investment expert has claimed.
In November, the electorate of Washington State and Colorado voted to legalise the recreational use of the drug and the business opportunity is huge, according to Troy Drayton, CEO of The ArcView Group, a San Francisco-based advisory firm that connects investors and entrepreneurs in the cannabis industry.
“At this point it is just in a few states, but it has the potential to grow into a $30 billion to $50 billion industry,” said Drayton. “When was the last time an entirely new industry became available in the United States?”
Drayton, speaking in an interview with Yahoo! Finance, said there were two main areas in which investors could get involved with the potentially burgeoning new industry. The first is the actual production of the plant, which is still federally illegal, so investors would need a large appetite for risk to go down that route, he said.
The second route is to invest in the ancillary businesses that are not directly involved with the plant’s production, but focus on the consumers of the finished product and those growing or selling it.
Drayton said there were many companies that were producing merchandise to sell to users of the drug and there were opportunities for investors to support their growth.
Although three states voted against the move in November, another 18 states plus Washington DC allow marijuana to be used for medical purposes, which opens up more users in the market place, Drayton said.
He added that there would be several different market places for the drug as different users required different options for consumption. This would mean investors have a wider choice of options, Drayton said.
To watch the full interview, click here.