6 ethical considerations for investing in cannabis
Not long ago, starting a cannabis company, let alone investing in cannabis, was illegal. But now, 31 US states have legalized medical or recreational adult use, while Canada has federally legalized cannabis, creating a new multi-billion dollar industry almost overnight.
We at Cocannco see a once-in-a-generation investor opportunity and are helping connect industry-leading companies poised for growth with thousands of new investors. Right now is the right time to invest, but you may have some ethical concerns about investing in cannabis.
Here are six ethical reasons why you should consider investing in cannabis:
1. Investing helps mature the industry
A legal cannabis industry is a highly regulated industry. Each product has a shelf life, packaging standards, and complaint and tracking processes for maximum accountability. Higher product quality and industry standards help fight the negative consequences of an illegal market, such as harmful products, abusive labor practices, large carbon footprints, and funding cartel power. If people are going to use cannabis anyway, a legalized market helps them get better products while not supporting unethical suppliers.
2. Investing helps elevate ethical companies
The cannabis industry had operated illegally for a long time. Ethical businesses need more access to capital for the legal market to root out unethical vendors and outcompete illegal cartels. The more good companies have access to capital, the more they can build a well-regulated, sustainable industry. Cocannco vets cannabis companies so investors can feel confident their money is going towards high-quality operations that hold themselves to the highest regulatory standards.
3. Investing helps with cultural harm reduction
Current research suggests that cannabis is less toxic, less addictive, less harmful to the body, and less likely to contribute to violent or reckless behavior than alcohol (the most used drug in the US today). While both substances can impair thinking and memory, especially in developing brains, on a societal health level, cannabis is a far safer alternative for most. It could save thousands of lives a year if more people prioritized it over alcohol or tobacco.
Indeed, it also has many medicinal benefits. Increased accessibility to cannabis by scientists, medical professionals, and innovative cannabis startups can help reduce harm in our communities.
4. Investing helps support the untapped medical cannabis market
Thirty-seven states have legalized medical cannabis, and almost half the US population has legal access. Millions of people with cancer and other ailments could benefit from medical cannabis and its safe, affordable pain relief. With President Biden signing a bill clearing the way for needed medical cannabis research on December 2, 2022, the market is positioned to expand even more. Suppliers and their research teams will need increased access to capital to keep up with new market demand. One of Cocannco’s target investments, Clearly California, has a medicated rub with glowing reviews.
5. Investing helps strengthen cannabis banking standards
As the cannabis industry grows and matures, a new wave of banking standards is needed. Many cannabis companies over the past decade were forced to function on a “cash only” model because of limited banking options and couldn’t use consumer credit cards. This complicated bookkeeping and forced companies to maintain substantial cash vaults susceptible to theft or money laundering.
The good news is that limited checking and savings banking have become available through select state-chartered banks and credit unions. These banks and credit unions must follow strict due diligence laid out in FinCEN guidance to provide deposit or lending services to a cannabis business. So, while federally chartered institutions would still be in danger of losing their license for allowing cannabis banking, there are alternatives. As cannabis companies expand through investor capital, they are forced to work with well-regulated, higher-standard banks and follow more transparent and ethical bookkeeping standards.
6. Investing helps support social responsibility programs
We at Cocannco firmly believe that nobody should be in prison because of cannabis possession. The War on Drugs disproportionately targets poor communities of color and uses propaganda to stigmatize consumers and growers. Most of the cannabis industry recognizes the harm caused by the history of prohibition and supports social responsibility programs that give back to those in prison.
With the support of investors, top companies with social responsibility programs thrive and continue to set a norm of “giving back” that's rarely seen in other industries. One of Cocannco’s target investments, Infinity Group, has a social responsibility program.
Ready to learn more about how Cocannco vets its investment opportunities?