How to invest in the US cannabis industry

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Individuals looking to invest in the cannabis industry have multiple options to consider.

The two most popular routes are investing in producers, processors and retailers directly involved with the plant, or investing in ancillary businesses that provide services to the operators, including software companies, consulting firms and security providers.

Risk tolerance guides the investor’s path. For the risk averse, ancillary businesses can provide a safer investment free of potential hurdles put up by the federal government.

But for the risk seekers, obtaining licenses that allow cannabis production could be the most lucrative approach.

Legal cannabis is a fast-growing industry in the United States and is projected to grow to$36.8 billion dollars by 2020. If the trend toward legalization continues to spread to all 50 states, according to the ArcView Group, cannabis could become larger than the organic food industry.

As with any investment, the bigger the risk, the...

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