29 states plus the District of Columbia have legalized the sale and use of medicinal cannabis or recreational adult-use with more states expected to follow. By the end of 2020, the cannabis industry is projected to double in size from $22 billion to an estimated $44 billion. Despite growth in the market, marijuana is still considered a federally illegal substance in the U.S. and is causing investors to hesitate. One less risky way for enticed but wary investors to get involved is by taking a look at ancillary companies in the space. These companies are sidestepping a lot of the risk while profiting from growth in the industry without ever touching a single plant. One interesting newcomer is Doyen Elements. The company is hoping to profit from providing a multitude of services through its consortium of 16 long-standing, high-performing companies.
Just two weeks ago, Doyen Elements began accepting investments in its IPO. But unlike most issuers, the company has opened up its doors to retail investors looking to buy in before the company’s planned listing on the OTCQX. Doyen Elements is currently building one of the largest grow facilities in North America, a 234,000 sq. ft. building capable of producing upwards of 70,000 pounds of cannabis per year. According to the company, this building will be the first of many self-contained grow facilities the company will lease out to legal cannabis companies. “We can do a build-out for a 100,000-square-foot facility for between $7 million and $8 million, while many companies are paying upwards of $15 million to become operational,” says Geoff Thompson, Doyen’s founder.
With the new legal cannabis era comes a sea of startups hoping to make it big in cannabis. As more states legalize, the industry will become even more saturated than it already is. It’s important to do your research to sort those poised for success and those poised to fail.
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Here are some reasons Doyen Elements is worth paying attention to:
- Doyen Elements is offering a strategic Real Estate component with plans to position over 1 million sq. ft. of grow facilities across the U.S. This could prove advantageous as the rules and regulations change around cannabis. The company would already have an adaptable and widespread infrastructure to adapt.
- 16 equity purchase agreements are in place for companies involved in multiple areas of the industry, from management, green technology, to research, etc, each company operates 100% independently from one another. This allows Doyen Elements the opportunity to profit from 16 different revenue streams while giving investors access to a diversified portfolio of companies in the industry. Also by cross-selling its services the company will obtain a higher ROI on client acquisition costs.
- After the offering closes and subject to qualification, the company plans to list on a stock exchange. This offers investors more transparency and liquidity than private companies and the ability to buy and sell on the open market.
It’s clear that the cannabis space is heating up and it is very important to do your research. Through September 28th, the Cannabis Stock Index was up 26.4% month-to-date.1 Investors want to strike while the iron is hot.2 This is only the beginning of the legal cannabis industry and while finding the diamonds in the ruff is definitely difficult, the potential upside for those who get in on the ground floor makes it worth the trouble.
2 420 Investor Cannabis Stock Index 10/31/13-03/18/14
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