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One industry group says that the legal marijuana business will increase 64 percent this year and top $10 billion within five years.
Investors were watching closely this week as lines stretched around the corner at marijuana dispensaries in Colorado, the first state in the nation to legalize recreational marijuana use. Washington will follow shortly.
Meanwhile, marijuana and related products have become hot investments, complete with gatherings where marijuana start-ups make pitches to people interested in putting serious money into the industry.
The medical marijuana business conference had its second meeting this fall in Seattle, and 30 exhibitors paid as much as $16,000 each to attend.
However, because marijuana is still illegal at the federal level, banks are loathe to provide funding. So why would investors take such a gamble on an illegal product?
“This is a risky business, and any business has risks and benefits, and where there are risks, there are often rewards," Troy Dayton, co-founder and CEO of The Arcview Group, told Here & Now’s Meghna Chakrabarti. "The writing is on the wall. Marijuana prohibition is very likely to end over the next five to seven years. If you’re an investor, and your game in the investment game is to get ahead of what’s going to happen, then this is often a good bet.”
Dayton's organization is part of an accredited cannabis investment network.
But the growing industry has critics, who use the analogy of alcohol, which has been legal for 80 years. The critics say that 20 percent of of drinkers account for 90 percent of all alcohol consumption.
Critics say that these are industries that profit from the addict or the near-addict and worry that that is the model for marijuana.
"One of the key things to keep in mind here is that we’re not talking about a new substance, and there’s no panacea, there is no way to solve all the challenges of a particular substance," Dayton said. "But one thing’s for sure, a regulated environment with legal businesses is going to do a much better job of handling this product than the current criminal market."
This story aired on January 3, 2014.
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