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https://www.forbes.com/sites/duncanrolph/2017/12/12/marijuana-is-the-next-big-investment-but-heres-why-most-investors-will-have-to-wait/1#6ecbc78d2329

Dec 12, 2017 @ 10:07 AM 1,808
Marijuana Is The Next Big Investment, But Here's Why Most Investors Will Have To Wait
Duncan Rolph , Contributor
I cover all things investment. Insight with a twist.
Opinions expressed by Forbes Contributors are their own.

Photographer: Stefan Wermuth/Bloomberg

California is one the latest states to legalize recreational marijuana. With Proposition 64 going into full effect on Jan. 1, 2018, we could be one step closer to new federal regulations, which would make investment opportunities in the marijuana industry more accessible to everyone.

Cannabis-related businesses constitute one of the fastest growing industries in the United States. The medical marijuana market alone was worth $4.7 billion in 2016 and is expected to grow to $13.3 billion by 2020. Meanwhile, adult recreational sales amounted to $2.6 billion in 2016 and could reach $11.2 billion by 2020. With promising revenue and expansion across states, industries and product offerings, the marijuana industry has become an attractive opportunity for investors.

But until now, investor participation in the legal cannabis market has been relatively small. Will that change? And, if so, how can investors get in on the ground floor?
Limited Opportunities in the Past

Silicon Valley has been funneling capital into the cannabis industry since the early stages of the legalization process, but this space remains closed to the average investor. The only way for individual investors to take advantage of the industry's 16 percent projected annual growth rate is to make a direct investment in a marijuana business or to join a syndicate group as a limited partner. However, this approach is not a viable option for most investors due to the amount of capital required, access to deals, and illiquidity.
New Frontier Analytics

Marijuana Annual Growth Rate
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Even indirect exposure via pharmaceutical and medical research companies is extremely limited, unless you have millions to invest like PayPal co-founder Peter Thiel, who recently invested in the Seattle-based private equity firm Privateer Holdings, which funds marijuana-related medical research and products.

The main obstacle to investing in cannabis comes from federal regulations. Even though 29 states currently have some form of legally permissible medical or recreational marijuana use, pot is still a Schedule I regulated substance in the eyes of the federal government.

Current federal regulations mean that companies involved in the marijuana space cannot go public. The SEC requires companies to meet some strict standards before they can be traded on the stock market, so any kind of involvement with the cannabis industry could run afoul federal laws. Publicly-traded pharmaceutical and biotech companies deliberately stay away from the cannabis industry for this very reason.
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