New paper highlighting the risks of investing in the marijuana industry

Like other businesses, marijuana suppliers need capital to operate: money to acquire or lease land, money to pay for equipment and facilities, money to pay suppliers and workers, etc.  Investing capital in marijuana suppliers carries most of the ordinary risks that inhere in investing: a given supplier might be poorly managed, competition might squeeze profits (though licensing can limit this risk), and so on. But investing in marijuana suppliers also carries some extraordinary legal risks: the firm and its assets might be seized by law enforcement agents, the investors themselves might be arrested for conspiracy to distribute an illegal (federally, anyway) drug, and so on.

Earlier, I spotlighted one big legal risk investors face (see here) – the risk that an investment contract with a marijuana supplier will be deemed unenforceable in a court of law—and the limited options that investors have to protect their investment interests (see here). But Adrian Ohmer, an associate at a Michigan investment firm, has just published an article in the Michigan Journal of Private Equity & Venture Capital Law more thoroughly cataloguing these risks and discussing some potential solutions: Investing in Cannabis: Inconsistent Government Regulation and Constraints on Capital.

The paper is sure to be of interest to anyone curious about the business of marijuana.  (Hat tip to Rick’s former advisor, Noah Hall, for sending this paper our way – always much appreciated!)