Cannabis Investments, Due Diligence & SWOT: Ensuring Viability & Success

investments

When first getting into the cannabis industry, many would-be operators grossly underestimate the time, money, and energy required to get their business off the ground. For those without the resources to start from scratch, cannabis investments provide a sound way to break into the industry. Whether you’d prefer a hands-on or a hands-off approach, there’s an investment opportunity for you. As long as due diligence is done properly, you can have a strong entry into cannabis.

investments

Two crucial aspects of any investment, due diligence and SWOT tell you everything you need to know before getting involved with a cannabis business. Armed with this information, you can make the investment decision that will yield the best results for your personal goals.

Here’s everything you need to know about due diligence, SWOT, and your cannabis investments.

Get the Most Out of Your Cannabis Investments

The cannabis industry is already volatile and risky, so investors should conduct business accordingly. Consider partnering with someone already involved with cannabis who can help you make informed and responsible investments. Having this insider knowledge and experience will allow you to mitigate risk while maximizing profitability

Furthermore, working with seasoned industry professionals sets you and your investment up for success. Experts who’ve been down in the dirt — not just warming the bench — understand the ins and outs of cannabis businesses as well as how to make them thrive.

For example, at Higher Yields Cannabis Consulting, there’s almost nothing we haven’t seen. Across our team of handpicked professionals, we have decades of combined expertise. Our experience enables us to deftly navigate risk, avoid common pitfalls, and identify and fill market gaps in the most efficient way possible. We understand that your vision is unique, so we work tirelessly to ensure fiscal responsibility without compromising your individuality.

 Performing Due Diligence

Arguably the most important step in making successful cannabis investments, due diligence involves intensive research and analysis to determine whether or not an investment is viable. With due diligence, it’s about the destination, not the journey, so always start by identifying your endpoint. Understand what your business goals are and go from there.

 The old real estate adage “location, location, location” holds true for cannabis. Keeping your endpoint in mind, evaluate locations that support your goals. If you’re looking at a dispensary, you’ll want a location that provides the best customer experience as well as foot traffic. Consider things like parking availability, visibility — for marketing and security purposes — and neighboring businesses.

Additionally, doing a market analysis allows you to peel back the layers and explore the specifics of the local market. Identifying gaps and sweet spots allows investors to see a potential investment that could be a more profitable option.

Understanding local and state regulations is crucial for compliance. Similarly, analyzing enforcement history can show you how consistently authorities enforce these regulations and whether or not they enforce them at all. In spite of enforcement patterns, though, always make sure your operation stays compliant.

Using SWOT for Cannabis Investments

Whereas due diligence looks outward, SWOT analyses look inward. Standing for Strengths, Weaknesses, Opportunities, and Threats, SWOT gives you a look at where a business is making money, where it isn’t, and where it could be. Looking at the team, business, investors, and overall operation, a SWOT analysis involves:

  • Areas of strength that can be leveraged for further profitability.
  • Weaknesses within the corporate structure, team, or investors.
  • Opportunities to fill gaps in the market to get an edge over the competition.
  • Internal threats like tax problems, debt, or compliance issues.

swot

A SWOT analysis is a good way to gauge an operation’s internal viability. When done in concert with due diligence, SWOT helps paint the bigger picture and determine which businesses would be profitable cannabis investments.

Putting It All Together

Properly evaluating potential cannabis investments tells investors how they need to be involved in order to make the operation successful. Whether more time, money, or other resources are needed is something that due diligence and SWOT will reveal.

Working with experienced consultants brings a certain degree of expertise to the table. Knowing the ins and outs of the cannabis industry, seasoned professionals can help you get the most out of your investments.

Interested in making successful cannabis investments? Contact us to get started!

Securing Your Cannabis Investments: 5 Common Pitfalls to Avoid

Investing is always a tough business. Cannabis investing is especially difficult due to the wide variety of fees and regulations each state imposes. For this reason, making sound cannabis investments requires time and effort to get right, and even then it can still be confusing. Here are five common cannabis investing pitfalls to avoid.

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How to Invest in the New and Rapidly Expanding Marijuana Market

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How to Invest in the New and Rapidly Expanding Marijuana Market

To date, more than half of the United States has some form of legalized cannabis program, which has led to a boom in marijuana entrepreneurship. Thanks to the trends in marijuana legalization, there is now a whole new industry for investors and entrepreneurs to explore business and investment opportunities.

And with hemp recently legalized on a federal level with the passing of the Agriculture Improvement Act or 2018 Farm Bill, industrial hemp joins medical marijuana and recreational marijuana as a new sector worth looking into for business ideas or investments. In this guide, we will discuss how you can invest in the new and rapidly expanding marijuana market.

Become a Marijuana Entrepreneur

Starting your own cannabis business is ideal for entrepreneurs who prefer to be on the front lines of the industry. If your state has both legalized recreational and medical programs, you have more opportunities to explore. There’s also the industrial hemp sector, which is predicted to become a multi-billion industry.

There are a few primary kinds of marijuana companies – marijuana growers, cannabis retail stores, extraction labs and manufacturers, and ancillary product and service providers. Marijuana growers are also referred to as cultivation or grow facilities. Cannabis retail stores or dispensaries are ideal for the entrepreneur who enjoys interaction with the consumers. Ancillary product and service providers are businesses that provide relevant cannabis services, such as marketing agencies, security companies, payment processors, and so on. This is ideal for the entrepreneur that prefers not to “touch” the plant.

Because the legal cannabis industry is fairly new and highly regulated, becoming a business owner will come with its challenges. Most states with marijuana programs, whether medical, recreational, or both, will have a limited number of business licenses to award. Therefore, the application process was designed to be rigorous and highly competitive. Licensing is merit-based, and securing a coveted application will require the expertise of cannabis advisors and industry experts.

Invest in Cannabis Companies Listed on the Stock Exchange

Not all states have a marijuana program, leaving many hopeful investors wondering how they can take advantage of the explosive cannabis marketplace. The good news is that business ownership isn’t the only channel for you to participate in what is predicted to be a highly lucrative industry. Beyond business ownership, you can still profit from cannabis by investing in marijuana stocks.

Between 2014 and 2018, the cannabis industry has more than tripled in worldwide sales – making it a $10.9 billion industry by 2018. Experts predict that the global cannabis market will reach over $66 billion by 2025. With forecasts like these, it’s no wonder the marijuana industry is attracting more and more investors.

Investing in the stock market exchange is an excellent way for you to enter the marijuana scene as a beginner. It’s also the ideal place to start if you have plans to put up your own cannabis business in the future. A good place to start is to put your money into marijuana businesses listed on the stock exchange. The following are the types of cannabis businesses that you could potentially invest in:

  • Agriculture technologies
  • Ancillary products and services
  • Biotech companies
  • Consulting services
  • Consumption devices
  • Cultivation and retail
  • Cannabis products and extractions
  • Holding companies
  • Industrial hemp
  • Organic farms

Before you invest in anything, do your research and understand the potential risks. Be thorough in your analysis of the opportunities available to you. This will help you narrow down your list.

Tips on Investing in Marijuana Stocks

Some may say that marijuana stocks or pot stocks are some of the most volatile. However, they are not any more unpredictable than any investment in the stock market. Therefore, approach investing in marijuana stocks with the same principles you would for any kind of stock. It requires the same diligence to research the company and identify whether its poised for growth. Pay attention to trends, monitor the news for relevant changes in the industry, and understand all the factors that may impact the company’s future profitability. Here are essential steps to take before buying cannabis stocks:

Understand the different types of cannabis products – There are two primary types of marijuana products – medical marijuana and recreational marijuana. Generally, there are more business opportunities in the recreational cannabis or adult-use marijuana sector. Medical marijuana typically only applies to patients with qualifying conditions; therefore, use and purchase is only allowable by prescription.

You should also understand the difference between cannabidiol (CBD), tetrahydrocannabinol (THC), and industrial hemp. CBD is only legal on a federal level if it was derived from hemp and has THC levels of no more than 0.03%. The psychoactive THC remains illegal. The federal government has recently legalized hemp, which is said to have over 25,000 industrial and commercial applications.

Evaluate the company’s potential – Look at the strength of the company’s management team. What is their growth strategy and competitive position?

When analyzing a marijuana company, learn more about their value proposition to see if the company can demonstrate what differentiates them from the competition. While many cannabis businesses are still in their early stages and may not yet be profitable, it will help to check if they already are. You can do this by following the company news. A strong balance sheet is also a good indicator of near future profitability.

Understand the risks – Because the legal cannabis market is still in its infancy, and rules and regulations are ever-changing, it’s crucial to understand the legal and political risks of investing in pot stocks. The marijuana industry dynamics shift rapidly because the marketplace is still learning and evolving. This is where it pays off to monitor cannabis laws, industry news, market trends, top marijuana stocks, and investing strategies.

Conclusion

Cannabis business ownership isn’t the only option for you to invest in the cannabis industry; you can also become a stock investor and buy pot stocks from the marijuana companies listed on the stock exchange. But before you start investing, it’s important for you to learn as much as you can about the cannabis industry, the different business types, and marijuana products. To lower the risks of investing in cannabis stocks, evaluate the company’s potential for growth and profitability.

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Higher Yields Cannabis Consulting

Higher Yields Cannabis Consulting

Higher Yields Consulting is a Marijuana Consulting Group comprised of industry experts with decades of combined experience in the legal industry. Whether you are looking to get into the business or already have a license we can help your business succeed. Call (844) HI-YIELD to schedule a free initial consultation.

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Creating Marijuana Legislation for a Successful International Cannabis Economy

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When it comes to establishing a national cannabis industry and regulations, there is no shortage of complications for governments and the people working within them. Establishing marijuana legislation that will set your country up for success is one of the greatest challenges nations face as the global economy embraces cannabis. The potential pitfalls around legality, public opinion, and opposition make developing laws around this burgeoning sector something of a minefield. For those working with marijuana legislation on the international stage, there’s a long list of factors to be aware of.

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Marijuana Business Investors

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Marijuana Business Investors

Marijuana Business Investors

The cannabis industry is quickly budding, attracting a new crop of investors. Navigating a new industry can be overwhelming, Higher Yields Consulting is your guide to the smartest way to invest in cannabis. HYC is the premier A-Z consulting firm, offering clients a full spectrum of services; a one-stop shop to explore investment opportunities, big or small, anywhere in the US. Our firm consists of 10 contractors working throughout Colorado, California, and Nevada. HYCs Cannabis Start-Up team has completed licenses in 10 states, developed SOPs for nationally recognized brands, and assisted investors in real estate negotiations. Our Development Team has designed, constructed and managed just under a million square feet of indoor facilities around the country. Our Growth Division assists businesses looking to grow beyond their walls and into new opportunities. Our teams’ holistic understanding of the industry’s current and future state, is invaluable to investors looking to cash in on cannabis.

In a burgeoning industry, it is crucial to invest with experienced investors, focused on due diligence and the legal complexities of the cannabis industry. Our latest product, HYC Quik-Starter Assessment, provides 100% transparency to guide the due diligence process. Quick-Starter is a 144-point data analysis tool that helps businesses identify their gaps from a people-process-technology standpoint. The Quik-Starter Assessment is a valuable tool for new investors looking to buy currently operating businesses. The analysis will quickly identify not only what needs to be corrected within the business, but how to fix it, and a road map of where the business needs to focus its time and investments.

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Higher Yields Cannabis Consulting

Higher Yields Cannabis Consulting

Higher Yields Consulting is a Marijuana Consulting Group comprised of industry experts with decades of combined experience in the legal industry. Whether you are looking to get into the business or already have a license we can help your business succeed. Call (844) HI-YIELD to schedule a free initial consultation.

The Latest from our cannabis consulting blog