Marijuana as an investor
April 21, 2015 9:27 AM Subscribe
I'm in Oregon where recreational marijuana will be legalized July 1st. I have about $50,000 to invest, but am not sure about where to start. I don't necessarily have any desire to invest time or effort, but I'd love to make an investment with a reasonable rate of return.
I see pot as a growing business and am looking to get in as an investor. However I don't want to post on craigslist - I want to be more discreet and aboveboard. Where should I start?
I see pot as a growing business and am looking to get in as an investor. However I don't want to post on craigslist - I want to be more discreet and aboveboard. Where should I start?
You should take a good long look at whether you're comfortable investing in an industry that is still effectively illegal under federal law. Tax and banking regulations make investing in the marijuana business challenging, even if it is legalized in your state.
You might learn more by reading up on Privateer Holdings, a private equity fund. They got some press because a well known VC firm, Founders Fund invested in them. They're presumably taking care to remain legal, the way they handle federal law should be very interesting.
posted by Nelson at 9:57 AM on April 21, 2015 [2 favorites]
You might learn more by reading up on Privateer Holdings, a private equity fund. They got some press because a well known VC firm, Founders Fund invested in them. They're presumably taking care to remain legal, the way they handle federal law should be very interesting.
posted by Nelson at 9:57 AM on April 21, 2015 [2 favorites]
I would talk to 4 front ventures. They do this sort of stuff. Disclosure: one of my good friends works for them.
posted by Ms Vegetable at 10:00 AM on April 21, 2015
posted by Ms Vegetable at 10:00 AM on April 21, 2015
Arcview is probably your best place for information and opportunities. I know the people who run it, and they're well connected and informed.
posted by gingerbeer at 10:00 AM on April 21, 2015
posted by gingerbeer at 10:00 AM on April 21, 2015
This planet money episode is worth listening to for a broad overview of some problems you will likely face.
posted by craven_morhead at 10:04 AM on April 21, 2015 [1 favorite]
posted by craven_morhead at 10:04 AM on April 21, 2015 [1 favorite]
The biggest problem with this is they have to be run as an all cash business pretty much because reputable banks won't touch them. This means you have to trust the owner/operator COMPLETELY as they can seriously cook the books, with no way for you to tell unless you want to take an active role in running the business. The planet money episode covers why they have to be an all cash business and the day to day challenges this presents.
An interesting/risky observation: If you are found to be involved in the illegal drug business AND own firearms that is an additional MANDATORY 10 year sentence (this is almost always plead down/dismissed as part of the plea bargain BTW).
posted by bartonlong at 10:24 AM on April 21, 2015
An interesting/risky observation: If you are found to be involved in the illegal drug business AND own firearms that is an additional MANDATORY 10 year sentence (this is almost always plead down/dismissed as part of the plea bargain BTW).
posted by bartonlong at 10:24 AM on April 21, 2015
I have to disagree with investing in the consumer side (paraphernalia, retail, bars etc). You'd have to do a ton of due diligence to make sure whoever is running the joint is reputable, knows the business etc. Too much of a human factor there outside of the industry.
I'd stick with investing in one of the existing venture platforms mentioned above where trained folks do all the heavy legwork for you.
posted by bitdamaged at 10:29 AM on April 21, 2015
I'd stick with investing in one of the existing venture platforms mentioned above where trained folks do all the heavy legwork for you.
posted by bitdamaged at 10:29 AM on April 21, 2015
You're late to the party. I'm a small-biz lawyer in Portland, and people I know have been seeing "money guys" wanting to team up with "dope guys" for many months now. It usually goes about as well as you'd expect, despite the lawyers' best efforts.
The state is being pretty helpful; they seem to understand that there are a lot of people who are new to small business wanting to get into this. But there are significant fees & infrastructure required, and I think many people are going to have a bad day based on incompetence at other points in the supply chain, even if they can get their own shit together.
You might look into opportunities supporting these businesses -- if you can figure out what sort of fuck-uppage will likely occur and a way to help insulate clients from it, that may turn out to be a valuable service for people who will be Hoovering up money hand over fist (if their expectations are correct!)
posted by spacewrench at 11:57 AM on April 21, 2015 [2 favorites]
The state is being pretty helpful; they seem to understand that there are a lot of people who are new to small business wanting to get into this. But there are significant fees & infrastructure required, and I think many people are going to have a bad day based on incompetence at other points in the supply chain, even if they can get their own shit together.
You might look into opportunities supporting these businesses -- if you can figure out what sort of fuck-uppage will likely occur and a way to help insulate clients from it, that may turn out to be a valuable service for people who will be Hoovering up money hand over fist (if their expectations are correct!)
posted by spacewrench at 11:57 AM on April 21, 2015 [2 favorites]
I'm involved in the space and can confirm from the above that it's the wild west. The laws are unclear and banking regulation is very unclear, as you'll see if you poke around. That said, I wouldn't be in the space if I didn't agree with you, and think that it's a growth field with enormous potential.
My advice would be to think about your priorities. If you're strictly looking to make money, you probably want to be investing in infrastructure or technology. Infrastructure will likely have a better consistent yield in the long-run but tech, being tech, will be your best bet if you find the right horse (Google around about Eaze, Snoop's new venture). Arview and Pioneer are the real deal. Beyond, them, though, your real advantage right now is that you are (I presume) a serious investor, looking to invest in smart people. That will go a long way.
Hope that helps. Feel free to PM me if you want to chat about it.
posted by vecchio at 6:05 PM on April 21, 2015
My advice would be to think about your priorities. If you're strictly looking to make money, you probably want to be investing in infrastructure or technology. Infrastructure will likely have a better consistent yield in the long-run but tech, being tech, will be your best bet if you find the right horse (Google around about Eaze, Snoop's new venture). Arview and Pioneer are the real deal. Beyond, them, though, your real advantage right now is that you are (I presume) a serious investor, looking to invest in smart people. That will go a long way.
Hope that helps. Feel free to PM me if you want to chat about it.
posted by vecchio at 6:05 PM on April 21, 2015
What's the old saying about during a gold rush, you should invest in picks and shovels?
posted by mon-ma-tron at 9:10 PM on April 21, 2015 [1 favorite]
posted by mon-ma-tron at 9:10 PM on April 21, 2015 [1 favorite]
The marijuana investment opportunity is full of scams and penny stock swindles. Be careful.
posted by MattD at 9:13 PM on April 21, 2015
posted by MattD at 9:13 PM on April 21, 2015
The need I hear about, from recent tourists to Colorado, is for a cool place. In other words, once you score, where to go? Smoking is forbidden almost everywhere including big chain hotels so maybe solve this dillema with an old family motel converted into the Stoners Inn.
posted by Rash at 10:39 PM on April 21, 2015 [1 favorite]
posted by Rash at 10:39 PM on April 21, 2015 [1 favorite]
I'm a criminal lawyer practicing in Oregon. I'm not your lawyer and this is not legal advice. User-level possession will be legal in July. No standards have yet been promulgated for who can sell marijuana, what sort of license they need, and in what quantities they can sell (commercially, at least.) To make things more confusing, the idiot prosecutor who's somehow in charge of the board governing the OLCC managed to get the guy in charge of determining these regulations fired. He was the only guy who was actually qualified, given that he previously ran the medical marijuana program in Oregon.
Anyway, I know plenty of lawyers who give advice on this sort of thing, and are active in cannibusiness. PM me if you want a name.
posted by Happydaz at 11:13 PM on April 21, 2015
Anyway, I know plenty of lawyers who give advice on this sort of thing, and are active in cannibusiness. PM me if you want a name.
posted by Happydaz at 11:13 PM on April 21, 2015
This thread is closed to new comments.
If it were me, though, I'd focus on tangential aspects of the business, such as paraphernalia, 'stoner-friendly' restaurants and bars, etc. That has the advantage of not being arguably a federal crime (and I say this as a very pro-legalization person).
posted by showbiz_liz at 9:33 AM on April 21, 2015 [3 favorites]