CANNAINVESTOR Magazine June 2016 - Page 34

4 Market Sizing Analysis and Attempting to come up with a cookie-cutter model that can be inserted anywhere around the country simply does not work based on the overwhelming diversity in cannabis law. A smart, direct, hands-on cannabis company operating in a state will follow specific guidelines of that state and thus cater their business processes to that particular market. Other business models deal with the same problems and would have to adapt to specific state and county laws, and this is common practice in agriculture and manufacturing businesses. General best practices can be established that are emulated and matched to a particular market. The cannabis industry is just getting to this level of maturity and is showing promise in developing models that can be adapted to a greater range of markets. Wise investors will look for opportunities in emerging state markets that show a high potential of acting harmoniously within the state’s market models. New or experienced investors in the cannabis industry need to look for companies that can grow quickly and have the ability to manage modular high-growth markets. When investing in an established company, analyze revenue and cash flow to ensure that there is enough capital for expansion. As we’ve seen already above, the cannabis industry is regulated by CANNAINVESTOR Magazine the states in which the businesses operate. When it comes to marketing, there are very specific cannabis industry rules that must be followed when it comes to either licensing, branding, IP, or franchising. Companies must know the barriers to entry for investors and license holders, the qualifying medical conditions for patients in the state in order to get medical cards, and medical cannabis companies understanding patient needs as well as potential clients in order for the business to know that they have a large enough market to sell to is of utmost importance. Often, operations that spread around the country do not consider key facts about the market that they are entering and establish themselves too early in markets that will not produce significant sales for years. stimulate growth and generate revenues as well as prove their capabilities in handling present and future financial obligations. Once you apply your investment criteria and understand your investment g