Supplying capital to early stage US cannabis companies can create profit opportunities for investors and operators.
Cannabis is a capital-intensive industry, which can pose a problem for early-stage US cannabis companies without much experience in securing financing.
The reluctance of US financial institutions to take on the legal risks of funding cannabis companies poses a massive challenge. Due to this financial hurdle, early-stage US cannabis companies in need of funding options can find a pathway to success with the help of accelerators. These capital-funding companies also present a unique opportunity for investors to take advantage of a market set to be worth tens of billions of dollars in the coming years. Without the ability to directly enter in the market, accelerators are getting their foot into the cannabis sector by financing early-stage US cannabis companies.
The US cannabis market
The United States represents one of the world’s largest cannabis markets, with 65 percent of the population living in a state where cannabis is legal — either medically, recreationally or both. 33 states have legalized cannabis for medical use. Ten of those states plus the District of Washington have also legalized cannabis for recreational use. More states are expected to pass legislation legalizing cannabis in the near future, including Illinois, Connecticut, Rhode Island, New Jersey and New York. The state of New York alone represents a huge market for US cannabis companies.
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According to a June report from Arcview Market Research and BDS Analytics, the US legal cannabis market is projected to reach US$20.9 billion by 2021.
The passage of the US Farm Bill in 2018