How COVID-19 Will Impact the Private Cannabis Markets

  • The bottom line is that cash is king today cannabis companies who have strong balance sheets will weather the storm and investment managers with dry powder will be in a position to deploy capital in opportunities that wouldn’t have otherwise existed if a surging bull market were to have continued.
  • global legal cannabis spending grew 46% YoY from 2018 to 2019 and while, in light of recent events, we don’t expect the same YoY growth from 2019 to 2020, we certainly still expect cannabis consumer spending to grow significantly.
  • A study by Bain & Company analyzed the financial performance of more than 5,000 companies over a ten year period including the global financial crisis, and found that winners’ grew at a 17% compound annual growth rate (CAGR) during the downturn, compared with 0% among the losers.
  • Below are the reasons we believe cannabis investors in particular should look at the current state of the financial markets opportunistically, especially when compared to other industries.
  • The cannabis industry is likely to show more resilience to a recessionary environment than other industries since cannabis is a vice and vice industries perform relatively well through market cycles.
  • Pete is a Founding Partner of KEY Investment Partners , a Denver-based investment manager focused on providing growth capital to early stage companies in the cannabis space.

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