Is Medical Marijuana a Safe Business?
Nowadays, medical science has created an approach to the efficacy of the herbs. A lot of scientific tests have done to rectify the old conclusions about some herbs that were banned before. As marijuana for instance, this particular herb is strictly banned in most countries around the world because it possesses negative side effects according to narcotic experts. However, 30 percent of the United States of America is allowing the production of marijuana especially the medical institutions. These surrounding institutions of medical marijuana are considered as the most benefited. In fact, right now there are two major marijuana industry companies who proposed plans for initial public stock offerings.
Initial public offerings planned
Since the prohibition of marijuana is strictly enforced, the companies that deal directly with marijuana are having legal complications. They are living in what we call legal gray area. Federal officials have conducted raids for state-compliant businesses in many states because marijuana is allowed for medical use in some states only. Generally, all marijuana is illegal on the federal level. As well as on the state level, anything that involves the usage of marijuana is illegal. The General Cannabis Inc. and GrowOp Technology Ltd. are two companies both avoiding the legal gray area. In doing so, instead of selling the actual substance, they only sell the technology and equipment needed for the production. These two companies both wished to be traded in public stock exchange by the end of 2011. An estimate of Ten million dollars would be raised for this initial public offering of medical marijuana, allowing individual investors to get hooked in this growing industry.
Marijuana related industries
Within the business of medical marijuana are a variety of industries that perform developmental activities. According to the estimation amount made, in 10 years the marijuana industry could be worth about $60 billion or more. These businesses provide fertilizers, grow lights, humidifiers, processing equipment including the packaging section and a lot more. The production also needs high technology to support the efficiency of the industry to produce marijuana. One of the most updated technologies they have right now in the production are the “grow trailers”. These technologies can be operated through smart phone apps, and other hydroponic technology. Since the business of medical marijuana is indeed profitable, several growth operations and medical dispensaries are now expanding their operations with short term loans in exchange for big profits. As estimated, the average markup for grow stores based on wholesale cost is ranging from 70 to 120 percent. This statistical data is quite a reason for further expansions.
The problem with marijuana finances
With the trace of progression in medical marijuana, a lot of investors are rising hoping to get in on the action. Since the growth of medical marijuana is incredibly increasing, it is indeed a reason for another conflict in the financial side. Predictably, the competition would even be harder for the companies producing marijuana. In 1992 on the State of California, the medical use of marijuana was first made legal. In the early years after it was first made legal, the price of the finish product dropped to $2,000 from that of $3,000 or more. Today, the owners of marijuana industry businesses assume that more states will continue to open doors for medical marijuana.