The second Cannabis Investor Survey has been conducted by KCSCA Strategic Communications, with over 300 cannabis investors surveyed. Roughly 86% of investors are concerned with a global recession over the next 12-18 months, but remain bullish regarding cannabis.
Almost 60% of investors surveyed believe that cannabis will continue to grow, despite the general state of the economy. This is appealing to investors, with only 5% saying they would sell their stocks in the event of a recession. The majority of investors say they would hold or purchase more stock in cannabis, with 68% keeping their current position and 27% acquiring additional stock.
Jeffrey Goldberger, Principal, and Managing Partner at KCSA Strategic Communications said, “At a time when many investors are concerned the economy is potentially moving towards a recession, they continue to view cannabis as a safe investment. While we find this reassuring, we encourage investors to apply the same rigor they place on their other investments; a strong management team, solid balance sheet, well-articulated business plan, and exceptional execution. Underlying these positive attributes is management’s ability and willingness to consistently and transparently communicate with all stakeholders.”
With this information in mind, it is important to acknowledge the struggles the cannabis industry faced this summer. Making money from cannabis has been challenging for investors, and compared to KCSA’s first investor survey, the number of investors who reported making money off cannabis stocks dropped from 90 percent to 40%. As a result, investors are now placing their bets across multiple cannabis companies using different methods, as opposed to just placing all of their eggs in one basket. Approximately 18% have positions in six to nine companies, and roughly 32 percent of investors surveyed reported owning shares in ten or more companies.
Though they remain bullish, investors have no doubt been more cautious than they were six months ago. According to KCSA, there has been a 30% drop in investors who have more than $100,000 invested in cannabis, suggesting larger investors are selling off to secure a profit and to minimize losses. Despite this, many cannabis investors believe their investments to be long-term, with 88 percent of investors planning to hold their investments for 1-10 years.
Many investors are keeping an eye on legislation. Proposed regulations like the SAFE Banking Act could open the door for more cash flow. In fact, 54 percent of investors say if the SAFE Banking Act was to pass in early 2020, they would increase their investments with 68% increasing their investments if cannabis were to be federally legalized.
“As an industry, cannabis is gaining momentum more quickly than most anticipated; the challenge that remains is the current regulatory environment. The capital crunch cannabis companies face today could be addressed with the passage of the States Act, Safe Banking – with a capital markets tweak – or rescheduling,” added Lewis Goldberg, Principal and Managing Partner at KCSA Strategic Communications.
KCSA is a fully integrated communications agency specializing in public relations, shareholder communications and social media, with expertise in cannabis, financial and professional services, technology, healthcare, digital media, and energy.
KCSA‘s Cannabis Investor Survey, which was analyzed in September 2019, collected data from more than 300 individual investors currently investing in cannabis. The net worth of the respondents varied in range, with 36 percent citing a net worth of between $100,000 and $500,000 and another 36 percent citing more than $500,000.