Here are 3 standard cannabis investing practices for the international scene

Here are 3 standard cannabis investing practices for the international scene
June 28 10:28 2018 Print This Article

As cannabis companies have been proliferating for quite some time now due to the internationally growing acceptance of the crop, investors should take up winning strategies to find which places guarantee the biggest of rewards.

Nic Easley, CEO of 3C: Comprehensive Cannabis Consulting cautioned of the thin chances of finding a jackpot cannabis firm as most are meant for an exit from the industry without seeing gains.

“There will be great companies and brands that emerge but there is going to be such a flood of companies that are crap, so most investors are going to invest in something crappy and never see a positive return on their investment,” Easley added.

Here are some tips from the cannabis consultancy firm chief that are worth adopting amid the numerous cannabis firms to choose from today:

Watch out for unreasonable valuation

Easley warned investors to research whether companies are setting reasonable valuations. He said some firms in the Canadian public exchange have been pricing themselves highly and at a level that is at a discord with its revenue stream as some base their valuations on their market share instead of sales.

An exemplary case emerged a few weeks ago when big U.S.-based cannabis firms green Thumb Industries and MedMen Enterprises set foot at the Canadian Stock Exchange.

Chicago-based Green Thumb Industries was well-received as it opened at a better value compared to its CA$7.75 offering, it closed some weeks in June at nearly 25 percent higher. However, MedMen Enterprises saw a different reaction as its pricing did not represent its revenue performance, according to Forbes.

Diversify across international markets

Easley suggested investors prevent themselves from concentrating too much on the Canadian market, which is experiencing an oversubscription – this is due mostly to the widespread news of its legalization of cannabis for recreational use.

“For international investors, look into venture funds that are investing around the globe in projects. It’s a better diversification strategy than hearing about some company and trying to invest into it,” Easley noted.

In fact, he recommended the U.S. market as proven in presenting great investment opportunities.

One fast-growing company that is emerging in the U.S. is Florida-based PotNetwork Holdings, Inc. (OTCMKTS:POTN). Through Diamond CBD, Inc., its subsidiary which is the primary maker of premium quality CBD products, the firm reported online sales in May logging $669,000. The figures show a 639 percent jump from the same period a year ago.

Meanwhile, the firms also said that it is preparing compliance documents, namely the Form 10, toward being a fully-reporting Securities and Exchange Commission firm. The documents are targeted for submission by end-June.

Look for international connections

Easley noted that it will be a worthy payoff to pour out your investments in businesses that have access to international deals.

“You need to vet deals not just through press releases. International relationships and deals are good but you need to get under the hood and make sure the deals bonafide.”

The rule also applies with PotNetwork, which has an exclusive agreement with affinity marketing company Exponential, Inc. (XPO2).

XPO2, founded by French-American entrepreneur Dom Einhorn, is a cause-related technology marketing firm that develops white-label e-commerce platforms while giving to charities, clubs and nonprofit organizations globally.

Under the partnership, Diamond CBD is tasked to be the exclusive XPO2 CBD product supplier. This gives Diamond CBD a new channel to provide all 18 of its top quality CBD products, including edibles, gummies, oils, tinctures and vape liquids, among others, to XPO2’s wide network of major participating online merchants such as Best Buy, Walmart, eBay, Groupon, Skechers, Nike and Staples, to name a few.

It indeed makes sense to adopt strategies when investing in a very broad industry like the cannabis sector. As such, Easley’s tips should be very helpful for each money manager out there.

 

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Jena Shepherd
Jena Shepherd

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