As you may have heard, the cannabis industry is one of the fastest-growing sectors in the market. This has not only created plenty of business opportunities, but it has also presented investors with no shortage of unique investment opportunities. With marijuana stocks expected to rise to nearly $20 billion by 2021, investing in cannabis is one of the best bets you can make this year.

That being said, finding a cannabis business that is worth your investment can be tricky. Whether you’re a new investor or a veteran investor, identifying risk is one of the best ways to spot which opportunities are worth your investment. If you’re looking to understand how to spot a cannabis business that is worth investing in, take a look below at a few tips to help you make the best decision possible.


As with every business and industry, competition drives growth. As the cannabis industry continues to grow, investors can expect to see new companies enter the market and, in turn, force companies to adjust their business models. While this ultimately depends on what type of business your investment opportunity performs, taking time to inspect which companies have a competitive advantage can point you in the right direction for investment.

Legal Considerations

While there are still federal laws, rules, and regulations in place that present hurdles for cannabis companies, many states have legalized the use and sale of cannabis. Additionally, more than two-thirds of the US supports the legalization of marijuana, which could speed up the legal processes in many areas. As policies continue to change, keeping an eye on legal considerations in their areas of operation could help you identify which businesses are long-term winners.

Company Growth

While the cannabis industry is experiencing exponential growth and will continue to do so, it’s essential that your investment is also growing. From dispensaries to cultivators and manufacturers, the cannabis industry as a whole is expected to expand in the coming years. Before making any investment, take time to consider the future plans of the company and how they fit with the trajectory of the rest of the industry.

Financial Health

One of the most important things to consider when identifying a worthwhile investment opportunity is what type of financial health you are investing into. When doing so, there are a few things to consider, such as financial projections, tax strategies, cash flow, and inventory turnover. Taking all of these things into consideration can help you protect yourself from investing in a sinking ship.

The Team

Last, but certainly not least, is the organization you are investing in. While it isn’t as cut and dry as some of the tips mentioned above, knowing your investment is in good hands is crucial. From the employees to the managers and business owners themselves, taking time to consider the culture of the business and what makes them unique, experienced, and capable can help you better understand the company as a whole.

Making Wise Business Investments

As with every industry, investments always present some risk. However, what separates the best investors from the rest is managing the type of risk you take on and how to capitalize on new opportunities. While the cannabis industry is still relatively young, the booming sector is expected to grow, presenting investors with unique opportunities to make wise investment decisions.

Are you still considering how to invest in the cannabis industry? Have any tips for potential investors? Share your story below and let us know in the comments what experience you have with investing in the cannabis industry.