A new type of investor is emerging to back private cannabis companies. And it will fuel further consolidation, IPO activity, and, most importantly, profit opportunity.

The cannabis industry is the highest growth and fastest developing industry in the world. What would be the normal cycle of any industry’s development is happening at an accelerated pace.

While rapid consolidation in most industries occurs only after the industry starts maturing, sometimes years in, mergers and acquisitions are happening now (as recently as earlier this week) at a shocking pace in cannabis. And it will pick up in pace next year.

The opening for all of this activity is the sudden and massive influx of capital into the industry. Only 18 months ago, it was incredibly difficult for cannabis operators to raise substantial funds.

Even Canadian producers, which benefitted from federal-level support for their existing medical businesses and their then-coming recreational businesses, found it difficult to raise all the capital they needed to fulfill their expansion ambitions. And American companies were starved for the capital they needed to grow nationally.

But with the new capital coming into the industry, particularly from venture capitalists (“angel” investors), the companies best suited to attract that capital were able to expand their brands and make acquisitions. In Canada, it was all with an aim of establishing a national and even international presence before competitors could, putting themselves first in the minds of consumers.

That’s starting to happen in the much bigger U.S. market now.

And here’s what’s driving all of it…

Three Wise Sources of Cannabis Capital

The door to the legal U.S. cannabis market, which used to only be open a crack, is well into the process of being kicked wide open.

The number of states with recreational cannabis programs on the books in the U.S. is in the double digits now, with at least two more expected early in 2019. And 33 have approved some level of medical marijuana.

Pair that with a series of green lights from the federal government including President Donald Trump saying he would likely sign the STATES Act, which would essentially leave states to do as they wish regarding the cannabis industry, and supported 2018 Farm Bill, which legalizes industrial hemp and gives a huge boost to CBD producers.

As such, big money has started pouring in. These are the three main sources of capital:

  • Private Capital Increases: The big private equity and venture capital firms missed out on the first wave for the cannabis sector. But many of their customers, like “family offices” and smaller private equity firms, opened up their wallets and started to invest with real amounts. It was capital like this which enabled companies like MedMen Enterprises and Acreage Holdings to expand and go public earlier this year.
The most exciting cannabis IPO opportunity we’ve seen this year is about to hit the market. You need to know about these four companies before other investors are scrambling to play catch-up. Right now, each one of these companies is capable of generating between $500 million and $3 billion for investors the day they go public. We’ve laid out all of the details on these four IPOs – and how you can get in on them – even if you’ve never invested a dollar in your life right here.
  • Public Capital Availability: When companies perfected the Canadian RTO (reverse takeover) and the Canadian Securities Exchange (CSE) opened its doors to American companies, capital suddenly became less wary of the U.S. companies. With the latter, the over the counter market had a liquid, regulated market-making organization to rely on. That will continue to be a source of capital for dozens of other companies in the United States, Canada, and elsewhere.
  • Big Strategic Investor Interest:  We’ve talked a lot about Big Alcohol’s Constellation Brands and its investment $3.8 billion investment in Canopy Growth and, more recently, the $2.4 billion investment  Big Tobacco’s Altria Group made in  Cronos Group. Other big companies entered into joint ventures, like Novartis‘ newly expanded partnership with Tilray Inc. These investments have been exclusively in Canadian companies, but it has provided other investors with a clear view of what the National Institute for Cannabis Investors has been saying for some time: This industry is destined to attract more and more massive investments from the largest companies in mainstream industries.

Coming Soon: The “Public Angel”

All of the above has created a “virtuous circle” where capital attracts more capital – a big strategic investor gives a few more private investors the comfort they need to enter the sector, the private investors help a company grow enough to go public, the public markets give the big investors a better idea of the “right” price at which to invest.

Soon, all of this capital will have another source – the “public angel.” This kind of “angel” is a company which is public itself, but it primarily makes investments in private companies. There are a few such companies around now, but they are mostly converting into operating companies – the opportunities available to them are just too big.

This is how one of the flagship picks in our Cannabis Investor’s Report portfolio got its impressive start – and it continues to make money off of those angel investments.

But there is another wave of public angels which will be coming to the IPO market in the next few months. Those of them which are successful will doubtless go through the same timeline as the current ones – success with some angel investments and eventual consolidation into operating companies with those angel investments they like best.

At the Institute, we don’t like to speculate too much on any particular consolidation move – people who do that are either guessing or they are in possession of material inside information. But new capital is coming to the industry, and many companies – public and private – will benefit, and consolidation will happen.

As an investor, you want to be in front of that capital – where the biggest gains are to be had – not behind it.

Thanks for being an important part of the National Institute for Cannabis Investors,

Greg Miller
Executive Director, National Institute for Cannabis Investors

P.S.: As we speak, an unprecedented flood of cannabis IPOs is barreling towards us. We’re talking about seeing as many as 42 millionaire-making IPOs hit in the next 90 days – four could go as early as January 31. And when it happens, it could create the next round of marijuana millionaires. And we want you to have an opportunity to be one of them. Just click here to learn how you can get in on this little-understood investing phenomenon.


Comments

8 responses to “New Generation of “Angel” Investment Riches Arising in Cannabis”

  1. Hello Greg I haven’t stopped reading the vast amount of information that you provide for us. The more I read your information I get it. I find myself learning from you everyday!!!! I have a question for you. Are you not the least concerned about any of your recommendations to date? I have a position in every last one of them. Reason I ask if the things you are sharing with us turn out like you have said, we are going to be in a better place financially than what we were before joining NICI. Thank you for giving me that possibility !!!!

  2. Hello I’m New to investing in the STOCK market so new I am having a hard time finding a broker to help me buy these awesome stock that you are sharing. I’m not rich and after reading so many different investment journals that if I buy their research and IPO I need to have 10.000 before I can get the names of these stocks. After watching the video, I was so impressed. But now I really need to have a broker I can trust and as a life timer I felt I can trust your ideas who in Canada would be the best one.

  3. I can”t seem to stay off the the site. I presently am reading and learning about 3 or four times a day. I will say one thing if the information you share with us is accurate which I have no reason to believe it isn’t. For those of us that are following your recommendations. We are going to make out like bandits. I tell you something else. You can not find this information anywhere else. I know I have looked!!! Keep it coming Greg The problem I am having now is keeping enough capital to invest in each and every one of your recommendations. Maybe one of your recommendations will be an overnight success` and that problem will be solved!!!! Keep up the good work Greg!!!!

  4. this is a exciting times we live in i think that cannabis stocks will continue to have gains more often than not even in what seems to be a difficult market

  5. Excitement, excitement. One, two, three, go. Let’s get going. Let the investing begin. I’m ready, but for the right reasons.
    John D.

  6. Can you please lower the lifetime upgrade of $495 cost? Please let me know if there is any possibility of making it more reasonable?

Leave a Reply

Your email address will not be published. Required fields are marked *