Cannabis investing grew over 200 percent in 2016 alone, according to a new report from New Frontier Data.
A new report from cannabis analytics company New Frontier Data and financial and strategic advisory firm Viridian Capital Advisors examined the growth in cannabis investing over the past two years. According to the report – Investing in the Cannabis Industry 2017 Edition: Charting the Next Stage in Cannabis Investing Following the Historic 2016 U.S. Election – cannabis stocks have seen significant growth in the last couple of years, with the Viridian Cannabis Stock Index growing 23.1 percent in 2016 alone.
Such a surge in cannabis stocks is even more impressive when considering the market was facing uncertain times with the Trump administration. Attorney General Jeff Sessions and Press Secretary Sean Spice have both signaled the potential for stricter enforcement at the federal level, where marijuana remains illegal. Investors seemingly weren’t too concerned that the new administration might stifle growth within the cannabis industry.
“Cannabis stocks significantly outperformed major indexes in 2016, fueled by speculative investment based on anticipated expansion of new legal markets. In the run up to the election, stocks increased by 207.8% and continued to rise, even with an uncertain future under the new administration,” said Giadha Aguirre De Carcer, CEO of New Frontier Data.
A cannabis market research report published earlier this year projects that cannabis markets in states with legalized marijuana will grow at a 27 percent compound annual growth rate through 2021, regardless of attempted interference from the marijuana-dubious Trump administration. New Frontier estimates the cannabis industry will increase to $24.1 billion by 2024.
In Q1 of 2017, cannabis stocks continued their growth, jumping up 17.8 percent. This growth rate exceeds the performances of the Dow Jones Industrial Average (4.6 percent), S&P 500 (5.5 percent), Nasdaq (9.8 percent), and the Russell 2000 (2.1 percent).
“While recent comments by the Trump administration did have an initial dampening effect on the market, we have seen continued growth relative to Q4 2016 whereby cannabis stocks are still outperforming other sectors,” added Aguirre De Carcer.
The New Frontier and Viridian report identified the underlying sectors in the market that were most responsible for last year’s growth, which included both business that touch the plant and ancillary businesses. Growth was also seen in consulting services, as businesses seek guidance on how best to navigate regulations, establish operations, and influence policy and political support.
“Investment activity in the legal cannabis marketplace continues to accelerate, both in terms of the aggregate amount of capital being raised and in the frequency of individual tranches. According to the data from our Viridian Cannabis Deal Tracker, the flow of investment capital is beginning to focus in on certain key vertical markets in cannabis and the valuations and deal terms and starting to diverge among these verticals,” said Scott Greiper, founder and President of Viridian Capital Advisors.
Medical Marijuana, Inc. is the first publicly traded cannabis company in the United States and the first in the world to develop a legal supply of cannabidiol (CBD). We are a family of companies, each strategically developed to achieve specific innovations in the cannabis industry. You can learn more about our individual companies and brands through our companies page, and keep up with the growing legal cannabis industry by regularly visiting our news feed.