It wasn’t too long ago that selling marijuana could get you a one-way ticket to the big house. But now, as more states move forward with legalizing marijuana, that trip to the big house can turn into a trip to the bank.
The legalization of marijuana in the US has lit a spark with investors who are turning their focus to the small — but rapidly expanding — medical marijuana industry.
“Everybody is running toward this as the next entrepreneurial wave — the green rush,” Robert Frichtel, CEO of Advanced Cannabis Solutions, told Bloomberg Businessweek in a January 2014 interview.

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A long-term play?

And indeed, the sector has already seen significant growth. A report by leading marijuana industry and investment research firm ArcView shows that sales of legal cannabis climbed 17 percent, to $5.4 billion, in 2015 and look set to grow an even more significant 25 percent in 2016. What’s more, sales may grow to a whopping $21.8 billion in 2020.
Those numbers may sound impressive, but many market watchers are calling marijuana a long-term investment. That’s because as with any new opportunity, there is a fair amount of risk in investing in marijuana. Those risks and challenges include the overarching decriminalization of marijuana at the federal level in the US, among other regulatory threats.
Penny stocks are also a risk — in the past, the Financial Regulatory Authority has even warned investors to be on the lookout for marijuana stock scams.
Overall, however, it seems that despite any concerns market watchers might have, the cannabis industry isn’t going to go up in smoke any time soon. “Business is very good,” Frichtel told The Globe and Mail. “We are in the early stages of what’s going to be a very large industry over time.”