Medical Cannabis’s Long-Term Potential Is Being Overlooked By Most Investors

By Hershel Gerson, CEO of ELLO Capital.

Cannabis is really two markets: one focused on medical use and one focused on adult use. There’s plenty of overlap. In states where cannabis is legal for both uses, dispensaries make little distinction in their display counters.

Investors, however, are showing a distinct preference for companies focused on the adult-use market over medical. From 2017 through mid-May this year, investors poured $1.8 billion into adult-use focused companies according to data in the MGO | ELLO Cannabis Private Investment Review, powered by PitchBook Data. By comparison, the medical segment trailed markedly, with $730 million total invested over the same period.

By some measures, this gap isn’t surprising. The market for adult-use cannabis is sizeable and growing: Americans will spend about $12.5 billion on adult-use cannabis this year, an increase of one-third over 2018. And the potential for growth in the years to come is significant as more states legalize adult use. Cannabis is also becoming a foundational ingredient in products such as beer and energy drinks, edibles, and balms, expanding the adult-use market even further.

Increasing recognition of the potential within the adult-use market is accelerating investor activity in the sector. In the first four-plus months of 2019, private equity and venture capital investment in adult-use cannabis companies topped $862 million, according to data in the MGO | ELLO

Full story available on Benzinga.com

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