As the industry celebrates another 4/20, the forces are aligning and encouraging a new generation of “traditional” investors to join the party.
DENVER, April 18, 2022 (GLOBE NEWSWIRE) — As the cannabis industry prepares for another record sale expected on 04/20Several factors are lining up to indicate that a wave of new cannabis investors may be gearing up to enter the space, according to KEY Investment Partners.
“In the early days of the regulated industry, it was primarily high net worth individuals and family offices who invested in cannabis,” said Pete Karabas, founding partner of KEY investment partners. “Today, however, we see a much wider range of investors interested in the space, including institutional investors who have actively researched the cannabis sector over the past two years but have not still invested in. Institutional investors will start jumping into the space in 2022 as the regulatory framework takes shape.
KEY estimates that it has seen approximately double the level of interest from institutional investors so far in 2022 compared to 2021. Additionally, the company continues to receive an increasing number of inquiries from companies seeking capital. For example, KEY recently conducted a funding round with several institutional investors to North Carolina-based Open Book Extracts. Karabas said several factors are driving this renewed investor interest, including:
The global macroeconomic environment has been very volatile, making it difficult for investors to allocate capital. The cannabis industry offers many investment opportunities that are high growth and exhibit recession resistant characteristics.
New states that legalize medical and recreational cannabis have the advantage of being able to examine the existing regulatory framework of other states (that have already legalized cannabis) when determining how they will regulate cannabis. It is clear that for many states it is now a question of “when” rather than “if”.
The stigma surrounding the cannabis industry continues to diminish with each passing day.
Cannabis law reform is one of the few policy issues today that is generally supported by both sides of the aisle in one form or another.
“Most institutional investors have educated themselves on cannabis and watched from behind the scenes over the past few years – once the regulations become clearer, they’ll be ready to step in,” Karabas said. “Investors have now seen the cannabis industry grow, develop and change shape through what many would consider unprecedented economic times. Cannabis has only been ‘mainstream’ since late 2018, and since then , it continues to exceed growth expectations, even in a volatile macroeconomic and political environment in the United States.”
Karabas said very few investment opportunities currently offer the same growth opportunities as the cannabis sector, and that a high-growth, recession-proof industry is attractive during times of economic uncertainty. The uncertainty created by the convergence of the pandemic, inflation and now war in Ukraine, combined with the growing number of states legalizing cannabis and the corresponding jobs created by the industry, is increasing the interest of investors like never before.
“A lot of people have talked about how cannabis is becoming mainstream in American culture and we wholeheartedly agree with that assessment,” Karabas said. “We believe that we will view 2022 as a watershed moment for the industry, and that increased institutional investment will be a key indicator that we have reached this tipping point.”
About KEY Investment Partners
Founded in 2018, KEY Investment Partners combines a systematic approach to deal sourcing and rigorous due diligence, with the goal of connecting investors to the most attractive cannabis opportunities. Leveraging decades of combined institutional experience, KEY finds unique opportunities in high-growth, market-leading cannabis companies that are led by exceptional management teams. The company uses proven methods to provide institutional-grade investment management and client service to those looking to capitalize on the rapidly growing US cannabis market.
For more information, please visit KEY Investment Partners online or via email [email protected]. Stay up to date on cannabis investing by subscribing to the KEY Investment Partners podcast, Unleash the Cannabis.
Contact: Jim Disset
The 9th block