Both cannabis and crypto markets have emerged as fast-growing ecosystems in the past few years. What prospects are there for both markets, that, at some point, have been compared to the Wild West?
Cannabis and crypto markets are on the rise as more countries move to accommodate the controversial yet highly profitable assets. Despite young nature, both markets have proven to be resilient and grown significantly in recent years. It is, therefore, no surprise that more firms are joining this scene in a bid to leverage the first-mover advantage.
Currently, the total cannabis market cap stands at over $33 billion. This figure was barely $8 billion back in 2017 and is projected to grow past the $100 billion mark within the next five years.
Crypto markets on the other hand recently bounced back to hit over $200 billion in market cap after the turmoil in March 2020 which saw the market plummet to $90 billion. However, it has since recovered but remains the most volatile market given such jumps in a span of one month.
At their early stages, both markets attracted investors with a high-risk appetite given the uncertainty in mainstream adoption. This narrative has, however, gradually changed as more opportunities to capitalize on these assets emerge. Today, a number of projects have been pioneered in cannabis and crypto industries with some going to the extent of integrating the two for comprehensive services. Despite the advancements, both markets have at some point been compared to the Wild West back in the 19th century.
Cannabis Market Prospects
At the forefront are more relaxed regulations in some jurisdictions. Cannabis which had for long been considered illegal is now allowed for medicinal use in Canada, Australia, Chile, Germany, Cyprus, Lithuania, Switzerland, Peru, and Portugal to mention a few. Some countries have also gone to the extent of legalizing cannabis for recreational use; they include South Africa, Canada, Georgia, and 11 states within the US. As a result, innovators have moved to capitalize on the growing market opportunities.
A new way of collaboration in the niche is getting traction. The german-based entity, Juicy Fields, created a Crowdgrowing method of starting a cannabis business from almost any place of the world. Ideally, the company saves interested cannabis growers the hassle of raising capital, obtaining a license, land, employees, and other service providers necessary to this business.
All one has to do is purchase ‘a plant’ online on their platform; this translates to a pre-designed income for the crowdgrower. The Crowdgrowing platform is able to realize more value through funds allocation to cannabis farms and other internal operations.
For example, a Good Manufacturing Practice (GMP) licensed firm in Colombia or Africa could be tasked with the cannabis farming based on a contractual agreement between them and crowdgrowers.
This approach by Juicy Fields allows its stakeholders to leverage the economies of scale as more crowdgrowers are on board. Producers are able to scale the product and realize more profits that trickle down to the crowdgrower. A participant in this market could begin earning profit in as little as 3 months given the emerging cannabis markets in Europe and North America. Alan Glanse, CEO and Founder of Juicy Fields states that:
“Crowdgrowing is not just raising money for project development, it allows you to take part in a highly profitable but strictly regulated cannabis industry.”
There are other avenues apart from being a crowdgrower that one would leverage to join this growing market. Cannabis stocks are currently trading in developed markets such as the US and Canada; these range from small to large scale and specialize in different activities in the market.
Canopy Growth Corp is one of the listed cannabis firms and specializes in the production and marketing of both medicinal and recreational products. In the NYSE, the firm’s stock price stands at $14.60 as of press date although this is relatively low compared to its $52.72 high within the past year.
Another listed company in the niche is Terra Tech Group which seeks to integrate modern tech with cannabis agriculture in order to create sustainable medicinal solutions. Its stock is currently retailing in the US OTC market at $0.072, a 5% drop from its last closing price according to MarketWatch.
One could also go big on this market as a Venture Capital; this would involve pumping money into promising cannabis projects. According to Business insider, venture investors contributed over $2.3 billion towards cannabis firms at the early stages within 2019; this was an increase from $1.5 billion in the previous year.
Some notable private equity and VC companies that have allocated a significant amount of funds into the industry include Privateer Holdings, Tuatara Capital, MedMen Capital, Phyto Partners, and Salveo Capital. Lastly, Device making is also quite an angle to capitalize on the cannabis market given the surging demand in tools such as grinders and smoking devices. mCig Inc. based in Seattle has since grasped the opportunity to make vaporizes with a focus on the cannabis market. Its stock price is currently trading at $0.037, a 2.33% jump within the past day.
The Digital Currency Market
In the crypto market, the growing demand has also been tied to better regulations and practical solutions in modern-day industries. Though still grey in most countries, a region like the EU has developed KYC/AML oversight for projects in this space under the 5th Anti-Money Laundering Directive (5AMLD) which was adopted by the parliament in April 2018.
The US is also on track in creating a legal environment for crypto oriented projects as its financial regulators led by the SEC provide consumer protection meanwhile. These advancements have played a major motivational role for crypto projects looking to launch or diversify into countries with less legal uncertainties. Notably, a market like Japan whose crypto laws are better defined has attracted more Initial Coin Offerings (ICOs) in the recent past.
Apart from the relaxed regulation, cryptocurrencies have caught the eye of industry experts looking to benefit from emerging technologies. Initially, the perception was they are mainly meant for transactions but this slowly changed with the emergence of projects like Ethereum and Tether.
The former has been hailed for its DeFi ecosystem which is pretty compatible with traditional finance aspects. The crypto market volatility also inevitably pushed for the integration of stable digital assets to protect consumers during extreme price shifts. In this regard, Tether pioneered a stablecoin dubbed ‘USDT’ backed by the US dollar.
Given the advancements, prospective investors can now acquire complex assets such as futures and derivatives whose underlying is Bitcoin or its peer cryptocurrencies. Though still at its early stages, a leading crypto exchange like Binance currently offers a range of products within this niche.
The platform facilitates entry into the crypto market through its Fiat gateway; ideally one can purchase up to 10 crypto coins within the Binance ecosystem. Some prominent mentions in the list include BTC, ETH, XRP, BUSD, BCH, EOS, PAX and the exchange’s native token, BNB. This can be done through multiple fiat currencies such as the USD, AED, AUD, CNY, CHF, CZK, DKK and the EUR amongst others.
As for its futures products, Binance derivatives further allow traders to long or short the market while offering leveraged positions as high as 125x.
Hailed for its market dominance, this crypto exchange has expanded its footprint globally in the past few years. Last month, Binance announced plans to launch a South Korean exchange based on its cloud platform; this will be the first initiative to pioneer on Binance cloud.
The firm has also made some other major milestones since the year began with the highlight being its recent acquisition of Coinmarketcap, the leading crypto market analysis platform. According to stats, the $400 million alleged purchase price marks the biggest Binance acquisition to date.
The firm’s CEO, Changpeng Zhao, said that the move was motivated by Coinmarketcap’s value proposition and its potential for growth. Apart from these two achievements, Binance also revealed it will soon launch its own visa-powered debit card that will be compatible with over 46 million merchants. The platform users will be able to top up these cards through Bitcoin or BNB via Binance Card App.
The Opportunities in Cannabis and Crypto
Both cannabis and crypto markets have emerged as fast-growing ecosystems in the past few years. Crypto enthusiasts and investors can join the industry for an ROI through token acquisitions; these assets are basically pegged to a project’s underlying.
Looking back, most of the innovations that have thrived in this space sold crypto tokens at the early stages which are in turn used to run the blockchain networks amongst other functions like trading. Alternatively, one could also jump on this bandwagon through secondary crypto markets which are facilitated by the existence of crypto exchanges, P2P platforms, and market makers whose function is liquidity creation.
In the cannabis market, things are a little bit different as the stocks are yet to be highly liquid. The young industry, instead, offers an opportunity for one to contribute as a plant grower or in the supply chain ecosystem. With Crowdgrowing, interested market entrants can further get income from cannabis cultivation while avoiding the legal formalities. This option presents a better business scalability case since the cannabis growers can produce more at will as opposed to suppliers who rely on the growth of the former.
Andrey Sergeenkov is a digital entrepreneur with more than 10 years of experience. Assisted in raising of 90 mln USD investments for more than 150 crypto projects. He believes that actual usefulness is the best PR for any project.