Legalized marijuana: budding new investment goldmine?

More states legalize marijuana

After Washington and Colorado recently passed initiatives to allow pot for recreational use, the debate surrounding the legalization of marijuana is at an all-time high. There are those that oppose it wholeheartedly, those that are interested in the discussion so that they can use marijuana with no consequence, and there are others who are wondering – can I turn this into an investment?

18 states plus Washington D.C. currently allow the use of marijuana for medicinal reasons and there are several players involved in distributing the substance legally – including machine manufacturers that employ biometrics to verify patient identities before disbursement – as well as insurance agencies and lawyers. Vincent Mehdizadeh, founder of the company disbursement machine company Medbox, warns that not just any investment in this industry will pay off: “The smart money is trying to help with compliance and transparency.”

The market for medical marijuana usage

There’s definitely a market for medicinal marijuana usage, but what does the passing of these recreational use initiatives mean for investors? It’s apparent that there is a desire for usage to be widely decriminalized, and with states starting to concede on the issue, early investors could turn huge profits by being the first to inject funding into this new legal use case.

However, I would proceed with caution; just because Washington and Colorado have passed these initiatives, local business owners are still holding off on selling marijuana until they know for sure if there will be federal punishment for doing so. I think there are many more discussions to be had before recreational usage is widely accepted and commercialized.

Therefore, if you’re considering making an investment in the marijuana business, the best option may be to invest in entities that are directly involved with the medical marijuana disbursement process and illness treatment industry as these are legal investment opportunities that can return a sizeable profit.

In regards to investing in recreational usage in states that are moving towards legalizing it, I would stray away from placing heavy bets in this space until there’s more information on how the federal government plans to respond to these new initiatives. Investing in a few small ventures could work out well, but going all in just to have federal officials pursue criminal charges in these states, would be a waste of funds.