Crowdfunding Is Revolutionizing The Cannabis Industry. Here’s Why.

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Green Entrepreneur | Chidike Samuelson | May 13, 2020

green money - Crowdfunding Is Revolutionizing The Cannabis Industry. Here's Why.The cannabis industry has seen two major upward surges in the last 5 years, the first came with the national legalization of cannabis in Canada which was subsequently followed up by many states in the United States and the second has come during this COVID-19 pandemic.

While this time has been a hard time for the U.S. and all other countries currently impacted by it, cannabis has helped ease anxiety and stress for many people. The consistent affirmation of cannabis businesses as essential services during this era has done wonders for the industry.

The cannabis industry is not just enjoying the upsurge caused by the epidemic, it is also experiencing the proliferation of crowdfunding or crowdsourcing platforms internationally.

Here are 4 reasons why crowdsourcing has been and will continue to be great for the industry.

1. Crowdfunding is rapidly reducing the shortfall in supply

In the U.S. and most of Europe, the demand for cannabis products especially of medical cannabis is still way higher than the supply and the Covid-19 crisis has upped it even more. Even if demand were to fall post-COVID-19 (Which is highly unlikely) there will still be excess demand and a shortfall of supply.

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The typical way to tackle this is to grow more cannabis, but not every business green-agribusiness can grow more than their present capacities. The limits on a budget make it quite difficult for some to increase production significantly.

However, crowdsourcing is doing a great job of encouraging cultivators and cannabis producers to make more by giving them access to funds that they would have been unable to raise otherwise. This has already caused a slight increase in production but is predicted to cause a larger shift in the coming months as the world recovers from COVID-19.

2. Crowdsourcing can break monopolies in the growing sectors

Before the dawn of the widespread legalization of cannabis, at the time when growing marijuana was still dubious, to say the least. It was private cannabis growers who braved the consequences and weathered the unlicensed storm. To a large extent, these private growers have been left in the dust since legalization hit and as major agri-businesses swept in and took over the market, building huge monopolies in the sector.

However, the crowdsourcing innovation that has recently taken the industry by storm has given them a fighting chance. It is common knowledge that good amounts of competition are healthy for any industry to flourish. The kind of competition that crowdsourcing envisions is very beneficial for the cannabis industry; an industry that still has a massive margin for growth.

See: Crowdfunding: Fundamental Cases, Facts, and Insights

The potential for breaking these huge monopolies is exceedingly desirable in the industry at a time like this, to enable it to grow to potential.

Crowdsourcing also helps individual growers overcome the red tape that currently limits their abilities to grow and scale.

3. Cannabis enthusiasts can benefit

For a long time, the fight for the legalization of cannabis has been championed largely by common people, medical cannabis users, cannabis advocates, celebrities, and others who were on a mission to educate the relevant quarters about the value of cannabis.

It was these enthusiasts who championed enlightenment campaigns on the value of cannabis to our emotional stability as a de-stressor without the negative side effects like violence, aggression, hangovers, and potential for poisoning that exist with alcohol.

Some of these people have put their money where their mouth is. Notably, the American Hip Hop legend, Snoop Dogg started his Cannabis-based businesses in 2018, but not many others have had the opportunity to, until now.

See:  Canadian securities regulators propose new nationally harmonized crowdfunding rules for comment by May 27

Crowdsourcing has opened a huge door for investment in the industry for enthusiasts who would love to make a little money from their loyalty to the cause or just for the business person who recognizes the huge opportunities in the market.

With crowdsourcing investments, investors are making investments in a sector that has not even approached the demand levels and that need funds to fulfill a constantly growing demand.

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NCFA Jan 2018 resize - Crowdfunding Is Revolutionizing The Cannabis Industry. Here's Why. The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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