MJBizMag January 2021 - 45

" We will see more appetite in the
coming year for sure, " said Karan
Wadhera, managing partner at Casa
Verde Capital, a cannabis-focused
investment firm in Los Angeles. " I don't
think necessarily it comes back to absurd
pandemonium, bubbly levels again,
because people have learned their lesson.
It will be a crawl back to those levels of
excitement in terms of dollars coming
into the space. ... A lot of those dollars
historically have been more retail and
less institutional. "
Here are six factors that point to a
more positive investment outlook for the
cannabis industry.
might be more comfortable placing their
capital in the marijuana space.
Changes, in fact, already are emerging
in the halls of Congress. In December,
the U.S. House of Representatives passed
the MORE Act, which would remove
marijuana from the federal Controlled
Substances Act.
How much more comfortable investors
become will depend on whether the
less-cannabis-friendly Republicans keep
control of the Senate or lose it in Georgia's
two Senate runoff elections on Jan. 5.
These election-related changes, Foreman
said, " give a pretty good indication
that the industry's bear market is about to
take a turn " and will " provide momentum
for cannabis in what will hopefully be a
bull market cycle beginning in 2021. "
ELECTION IMPACT
The Nov. 3 U.S. election
provided the cannabis
industry with a twofold boost
likely to impact cannabis
investing.
First, voters in the existing medical
markets of Arizona, Montana and New
Jersey legalized recreational marijuana,
while voters in Mississippi legalized
medical marijuana. South Dakota voters
legalized both.
Wadhera calculated that those new
states expand the " addressable " cannabis
market by 10% to 15%.
" It's very positive for the macro story
at the minimum, " Wadhera said. " This is
also very positive for sentiment. Except
for New Jersey, all the states that passed
legalization have been 'red' states. It
shows investors that this is no longer a
partisan issue. "
With Joe Biden's victory in the
presidential election and a potentially
cannabis-friendly White House that could
abet banking reform and other policies
good for the cannabis industry, investors
'ESSENTIAL'
AND RESILIENT
Industry observers have
long speculated that
cannabis is a recessionresistant
product much
like alcohol or tobacco. The pandemic
backed up that theory.
" COVID-19 was a net positive for the
industry. The most important thing that
COVID did from an investor perspective
was really prove out how noncyclical the
industry is, " Wadhera said. " We actually
have the data now to really show that
obviously cannabis has done incredibly
well during COVID. We've seen many
record sales months in states across the
country. It was largely deemed essential. "
Encouraged by this evidence of
resilience-especially in maturing
markets such as Illinois, Massachusetts
BETTER
COMPANIES
Although investors are
ready to spend again,
companies must show
profitability, scalability
and other positive traits.
" It's going from pretty loose financial
profiles and dangerous cash-flow levels
to being far more pragmatic. You're
learning from the past-and having
that type of responsible governance
across operations gives confidence to the
investor group who had been hesitant to
come into the industry, " Bennett said.
Foreman agreed: " This underscores
the new dynamic of the industry
investment landscape, which is more
traditional standards and analysis to
drive investment decisions. "
Beyond profitability and scale,
these traditional standards include
management teams that have C-suite
experience both outside and inside
the cannabis space, obtaining legal
protections for intellectual property
and copyrights as well as professional
recordkeeping and accounting.
" We've trended in the way of
reconciled books and records, people
switching from maybe a QuickBooks
platform as their financial services
platform and upgrading to CPAs and
qualified CFOs with C-suite experience.
You're seeing more of that, " said Donnie
Emmi, a partner with Hoban Law Group
headquartered in Denver.
January 2021 | mjbizdaily.com 45
and Michigan-investor interest in
cannabis will continue into 2021.
" I think 2021 will really be an
extension of that, " Wadhera said. " We
see a lot of upside in 2021. "
http://www.mjbizdaily.com

MJBizMag January 2021

Table of Contents for the Digital Edition of MJBizMag January 2021

MJBizMag January 2021 - 1
MJBizMag January 2021 - 2
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