Accredited Investors
In ArcView’s network, the number of accredited investors has grown to about 110 from about 20 a year ago, Dayton said. Members, who include Republican New York Assemblyman Steve Katz, pay a $3,500 annual fee and the company seeks investors who can put at least $50,000 into the industry in the next year, he said.
ArcView did six times more business last year than in 2012, Dayton said, declining to provide revenue figures. ArcView projects the U.S. marijuana market that’s legal under state law will grow to $2.34 billion this year.
Support for legalizing marijuana reached a majority among Americans last year for the first time, at 58 percent, according to a Gallup poll based on telephone interviews with 1,028 adults and released in October.
Prosecution Threat
Investor interest is increasing as the threat of prosecution wanes. While federal law still classifies marijuana as an illegal substance, the U.S. Justice Department said in August that it wouldn’t challenge the legalization laws in Washington and Colorado, provided the states prevent out-of- state distribution, access to minors and drugged driving, among other things.
Mark A.R. Kleiman, a professor of public policy at the University of California at Los Angeles, said a federal crackdown on marijuana-related businesses “would be the least of my worries.”
“I just don’t see how there’s money to be made producing an agricultural commodity,” he said in an interview. “Once this is a competitive market, prices will be driven down to the level of costs. Costs for cannabis are very small, if it’s produced legally.”
‘Ancillary’ Businesses
While some investors are starting to feel more at ease about investing directly in marijuana businesses, many are sticking with so-called ancillary companies with less risk of tangling with the federal government, such as security equipment, mobile applications and advertising.