Why Cannabis Startups Are So Economically Potent

Why Cannabis Startups Are So Economically Potent
Why Cannabis Startups Are So Economically Potent

It’s tough to find a subject more polarizing than marijuana legalization. Yet for all the fearmongering and cannaphobia, this business could be just what the American economy needs for longstanding revitalization.

The trick will be to take away the apprehension and move us toward a climate of collective acceptance. Half the country already gives individuals access to medical marijuana, and eight states allow for its recreational use. In Colorado, the revenue is hovering around $1 billion, and across the nation marijuana sales should approach $22 billion in three years. And it’s all legal.

So what’s holding us back from embracing this emerging marketplace that could completely galvanize our workforce and be a boon to entrepreneurs in the cannabis space? In a nutshell: hype.

Where Word-on-the-Street and Political Rhetoric Part Ways

If you paid attention only to politicians like Attorney General Jeff Sessions, you would think that the only people taking, manufacturing, or investing in cannabis are, as our president would say, “losers.” Sessions notoriously noted that marijuana users can’t be “good,” illustrating just how tough it is to get a basic discussion started about this plant.

It isn’t the fault of the current administration and its elected officials, though, as cannabis has been a stigmatized drug for more than half a century. Despite proof that it’s less toxic than alcohol or tobacco — both of which can be purchased anywhere with an ID — it’s been labeled a gateway drug to narcotics like heroin. What gets lost in the shuffle is the litany of medical benefits it has and that it’s been accepted in most of the country.

The overall goal is a lofty one: Get people to talk about the positive aspects of cannabis and rid themselves of misinformation. And if the recent cannabis stock index — which exploded by 236 percent last year — is any indication, they’re starting to get the message.

How a Naturally Occurring Plant Could Avert Recession

The cannabis industry is a multibillion-dollar business opportunity, and entrepreneurs who want to earn money and produce valuable goods need to sit up and take notice. Unfortunately, those looking to dip a toe in will face several immediate challenges.

The first threat comes from the federal government, which categorizes cannabis as an illegal substance. Even in states where cannabis is legalized, such as Colorado and California, federal law supersedes state law, keeping outside investors and federal banks from funding or opening accounts with cannabis businesses.

Without the ability to obtain funding or manage their cash, those entrepreneurs remain strapped for seed monies. Even bankruptcy courts turn a blind eye to legal (state-wise) cannabis companies; the bankruptcy courts, after all, operate under federal jurisdiction. And if an entrepreneur gets desperate when searching for cannabis industry real estate funding and goes to a hard-money lender? He’s likely to pay up to 18 percent in interest.

Then there are tobacco giants like Marlboro that have the resources to mass-market cannabis to a budding consumer base and hinder early-growth companies. Big Tobacco corporations know that smoking is down 21 percent in the past 10 years, so if they can (legally) recoup their losses in cannabis, they will.

Despite these threats, some founders are willing to brush off worries and dive into a cannabis marketplace. They’ll be poised to profit if they keep a few factors in mind:

Read the rest of the story at The Observer