Banks must find their Crypto courage

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Banks that were hoping the cryptocurrency industry might collapse and go away are once again showing concern as digital currencies rocket higher in a new bull market. On January 1st, 2019, the total market capitalization of the top 100 cryptocurrencies was $126 billion, climbing to over $240 billion as of November 1st, 2019. [https://coinmarketcap.com/]

News cycles still love to hype up the crypto industry, just as they did during the previous boom of 2017. And banks are asking themselves – how should we react this time around?

The short answer is that banks need to wake up to the opportunities that digital
currencies and a modern FinTech marketplace offer, rather than react with fear and rejection. Banks should take the initiative and develop a solid crypto strategy for a number of reasons:

  • Сrypto has proved it is not a flash in the pan. Volatility is a feature of the market, and investors show strong appetites in the good times and solid resilience during the bad. Bitcoin and other cryptocurrencies are here for the long term.
  • Numerous crypto businesses have felt the pain of being rejected by mainstream banks but would actually be profitable clients. Previously, banks did not want to get involved because they perceived crypto businesses as being resource-intensive and risky from a regulatory perspective.
  • Lastly, global mainstream interest and acceptance of crypto will continue to grow. Utility payments and coffee purchases can now be done with cryptocurrencies. Crypto ATMs are increasing in number.

Despite this fast-growing and largely untapped market, banks have taken a more nuanced view. Their caution is driven by regulatory uncertainty.

Control over currency circulation and use is an integral part of government monetary policy, providing levers for stimulating spending and investment, generating jobs, managing inflation and avoiding recession. No government will risk giving up these tools. Despite the appeal of cryptocurrency mass adoption, regulators will always act to restrict the amount of money circulating in an economy – virtual and otherwise.

The IRS treats digital currencies as property, but with a degree of suspicion that taxable gains from the growth of cryptocurrencies have been widely underreported. Even though Bitcoin does not currently have legal tender status in any jurisdiction, it may, in the future, make more sense to tax cryptocurrencies like regular money.

The cryptocurrency ecosystem is complex and rather opaque, with masked entities acting in a financial environment that quite often lacks legal recourse. Traditional financial institutions are understandably hesitant to endorse this new market and its technology. So change seems to be gradual and incremental. But modern banks should, at the very least, have these challenges on their radar.

This is because finance and technology are constantly developing to include crypto as part of their service offer. And banks should adapt to keep up with the times. The new cryptocurrency bull market means that banks should develop strategies and offers that welcome legions of new customers from all sectors of the digital currency industry. It is an opportunity too big to miss.

If banks are cautious about publicly endorsing the cryptocurrency industry, one solid approach would be to prepare behind the scenes for future changes, rather than risk getting caught flat footed.

Beefing up security, risk management and compliance is a never-ending arms race – and not just for banks. Big players in digital currencies, such as crypto exchanges and investment brokers also take great care to comply with stringent know your customer (KYC) and anti-money laundering (AML) regulations.

Banks should become comfortable working with the leading cryptocurrency institutions because many have proved themselves adept at dealing with evolved threats and a great number now also have a track record of compliance that is just as robust as that of banks themselves. Banks should examine, integrate and streamline cryptocurrency security and compliance procedures into their own systems.

Lastly, cryptocurrencies and the underlying blockchain technology they are built on can be useful for banks in other ways – such as acting as an asset bridge to quickly resolve cross-border payments. In fact, IBM World Wire recently showed that financial institutions can seamlessly connect existing payment systems to clear and settle cross-border payments in seconds, where previously such a transaction may have taken hours or even days.

Regardless of how the markets will turn in 2020, banks must calmly assess and implement long-term cryptocurrency strategies. Those banks who continue to keep their heads in the sand will be at a significant disadvantage compared to those who embrace the future.

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Congress Must Pass the SAFE Banking Act

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We are now approaching an important and pivotal point in the future of the US cannabis industry and things must keep changing fast. The often discussed and rarely understood SAFE Banking Act is now moving closer to becoming by far the most important piece of federal legislation regarding the cannabis industry that has ever been approved by the US Congress.

THE SAFE BANKING ACT

It is officially named HR 1595 The SAFE Banking Act of 2019, and it allows banks and credit unions in the US banking system (almost all in the US) to conduct commercial banking with cannabis companies for the first time.

Presently most cannabis companies do their banking with actual paper currency. No checks or cards—they pay their employees, vendors, rent and taxes with bags of cash. It is dangerous and impractical. Most importantly, this lack of financial infrastructure is as a serious impediment to the cannabis industry. It makes it difficult to leverage loans, raise capital, deposit cannabis stocks with broker dealers and list on the major exchanges, among many others.

The SAFE Banking Act does not, in itself, end cannabis prohibition. That will require additional legislation or an official rescheduling of Cannabis, which seems likely in 2020. Also, it does not get rid of US Tax Code 280E, which prohibits claiming deductions or credit for any business involved in cannabis or hemp.

Nonetheless, the passing of the SAFE Banking Act will accomplish something very valuable: it is universally considered to be extremely positive for the US cannabis companies and industry generally and it will create enough momentum to effectively bring the end of prohibition with an immediate rescheduling and passage of the STATES Bill allowing states to decide on cannabis (just like alcohol after prohibition in 1937).

The stamp of authenticity and credibility of the US Congress will make it so that cannabis will not be perceived as an illicit industry under the risk of unpredictable federal intervention, but as a brand new industry with virtually limitless demand and uses in our society, from healthcare, pain management, to mental health, clothing, food, and many more.

THE CURRENT STATE OF THE CANNABIS MARKET

Despite the current laws and the recent 6-month downturn in the public markets, the cannabis and hemp industries are booming, and will continue to do so for a long time. The THC/CBD industry growth projections are continuing to increase and are now as high as $400 Billion.

New Frontier Data (the authority in on the global cannabis industry), released their Global Cannabis Report: 2019 Industry Outlook, and estimated that the current global total addressable cannabis market (regulated and illicit) is at $344 billion. This only takes into account the approximately 263 million people worldwide (3% of total population) currently using cannabis.

The same study estimates 1.2 billion people worldwide suffering from medical conditions for which cannabis has shown therapeutic value. It is evident then, that the adoption of medical cannabis treatment by even a small percentage of the 1.2 billion patients would contribute to create an even more massive cannabis market.

These same patients are the reason why there must be high urgency for the Senate to pass the SAFE Banking. There is ever-increasing research detailing the drastic health benefits cannabis can have upon severe illnesses such as cancer, Alzheimer’s disease, ALS disease, seizures, etc. The sooner the cannabis industry is allowed to develop the right financial infrastructure, the sooner this industry will grow in size and efficiency, and become a much-needed commodity, accessible and affordable for anyone needing cannabis treatment and pain relief.

THE SAFE BANKING ACT STATUS

The voters have spoken in state after state, and current legalization is working. The American Bankers Association (ABA), the American Bar Association, 38 state attorney generals, bipartisan governors from 30 states, and many more are now supporting the federal legalization efforts. The 85-year period of cannabis and hemp prohibition has been exposed as senseless, and not based on facts, and legalization is happening at a fast pace.

On September 25, 2019, the US House of Representatives passed the SAFE Banking Act with overwhelming, bipartisan support (321 to 103). The next step is for Senate Majority leader Mitch McConnell to bring it to the Senate floor for a vote.

THE SENATE MUST BRING THE SAFE BANKING ACT BILL TO A VOTE

Senator McConnell has a long-standing anti-cannabis stance, but he has been an ardent supporter of the Hemp Farming Act of 2018 and he recently met with Cannabis executives in Southern California to tour facilities and consult with some of the industry’s top leaders. His interest in this industry must transform into action on the SAFE Banking Act, to at least bring it on the Senate floor for a vote, regardless of whether he actually votes “yes.”

This bill has significant support on both sides of the isle, and it will most likely pass – if a vote is allowed. This bill needs a simple majority (51 votes). It is then up to President Trump who has 10 days to sign or veto or let it become law without a signature.

The Trump administration has not taken a clear stance on cannabis yet, but some members of his administrations, such as AG William Barr and Secretary of Treasury Steven Mnuchin have indicated on multiple occasions that they would not prosecute cannabis businesses in states where it is legal.

IMPLICATIONS FOR THE PRIVATE MARKET: ENTREPRENEURS AND INVESTORS

The result of passage of this bill will be a cascade of capital flooding into the industry. Literally billions of dollars of global investment capital have been on the sidelines waiting for some definitive signal from the US government that it will allow this industry to grow and flourish. The passage and signing of the SAFE Act will be that signal—and the response will far exceed what most investors are expecting.

And the publicly traded cannabis stocks – particularly the US operators – will likely trade at significantly higher valuations and with much higher trading volume, allowing them to access capital markets for the billions that will be required to build the estimated $50 billion in infrastructure needed.

Until this bill passes, although not so obvious, the limitations and legal impediments the cannabis companies are dealing with allows them the perfect opportunity to build solid foundations for their businesses. This federal prohibition of cannabis forces entrepreneurs to only move one state at a time, as they become legal. This creates discipline, that would likely not be required if cannabis was federally legal – there would be too many options, too much chaos and confusion.

During this time, entrepreneurs must work on their business blueprint and fundamentals, because once the SAFE Banking Act passes, there will be an ultimate green rush in capital, investors, and new business activities. Lots of opportunities and capital, lots of chaos and riding high. Only the most prepared entrepreneurs and investors will be able to ride the wave the farthest and build legacy companies in this new industry.

Informed investors that have been waiting for the right time to establish a position in this dynamic new industry may be wise to take advantage of the current decrease in cannabis stocks and establish a position for the long term bull market in cannabis that is likely to come with the passage of the SAFE Banking Act and the probability of the complete end of cannabis prohibition in 2020.

We urge Congress and the Trump administration to pass the SAFE Banking Act as soon as possible; in the meantime, the smart entrepreneurs and investors must make use of every moment until then and make the arrangements necessary to be in the best position for when the green wave comes.

SOURCES:

New Study Estimates the Global Cannabis Market at Over $340 Billion
SAFE Banking Act – House Final Vote Results
American Bankers Association – In Landmark Vote, House Passes ABA Backed SAFE Banking Act
Mitch McConnell Meets with Marijuana Executives and Tours Cannabis Facility in Hushed California Visit

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Private Equity and Venture Finance in MENA: Back to the Future

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The Middle East has a history of breeding amazing entrepreneurs the world over. One thing though that remains in short supply, in my personal opinion, is the buildout of a Team Spirit. I strongly believe in the fact that there’s still plenty of money and private equity capital available around the globe. Yet currency alone may be inapt to cultivate great entrepreneurs gelling to form great teams. A company’s biggest challenge and biggest advantage is and has indeed always been the team behind it – The right people with the right talent backing opportunities as they emerge, continually win. There is no secret sauce. The “cult of the personality” has clearly taught us all a lesson we are not about to forget anytime soon.

The Birth and Growth of Private Equity in MENA Unlike the United States, where the seeds of a fledging and flourishing PE industry were planted as far back as 1946, the Middle East has a short and tumultuous history. The emergence of PE in the MENA region made its ostentatious debut in the 1990’s.

The asset class was well-received, gaining the attention and interest of local – primarily GCC based – limited partners (LPs) which led to the establishment of many first-time funds successfully raising sizable pools of capital in a relatively short time period. By 2007, the funds raised for regional investments reached $6 billion. They unfortunately fell dramatically after a stable period between 2013-2016 to around $2 billion today according to Bloomberg.

One of the major setbacks to the industry was the recent saga of the Abraaj Group which collapsed in Dubai and left a dry deal landscape for regional-based PE firms. The saga though didn’t keep foreign private equity money away from the United Arab Emirates entirely.

Let’s be honest, the challenges, a bumpy evolution and such scandal is not limited to the region, as the US and Europe have had their fair share of capital chaos. Due to the asset class in the region being fairly nascent with few players, these events tend to be accentuated and overpublicized. In fact, foreign investors are as active as ever in the region.

This year alone, New York-based KKR & Co. and BlackRock Inc. agreed to invest $4 billion in Abu Dhabi’s oil pipelines, while London-based CVC Capital Partners agreed to buy a 3 percent stake in private schools’ operator GEMS Education. Prior, Carlyle Group’s $51.3 million investment in Jordan’s frozen food producer – Al Nabil Food Industries – posted a 40 percent cumulative gain. Not to mention the largest exits in the region’s history – famed acquisitions of Maktoob, Careem and Souq by Yahoo!, Uber and Amazon respectively.

Current State of Affairs Overall though, it is a fact that the downfall of Abraaj Group didn’t just kill the private equity firm Arif Naqvi built in Dubai. It crippled the entire market.

Since Abraaj’s swift and spectacular demise was set in motion almost two years ago, funds went from flourishing to finite in which there was virtually no money raised by private equity firms based in the Gulf Cooperation Council despite strong performance by PE firms almost everywhere else, according to Seattle-based data provider PitchBook and London-based Preqin. Although Jordan, the UAE and Lebanon are still the centers of influence for PE and VC in the MENA region, some drastic policy measures and recommendations are in order with some underway in these countries and others as well to turn the tide and create a MENA powerhouse.

A close look at the private equity industry in MENA shows us indeed that it has faced a succession of setbacks over the last 15 years – which few players are still ready to accept – and some thorny geopolitical issues may be creating new uncertainties despite the fact that the current roster of firms active in the region still consist of seasoned professionals who have negotiated previous waves of political and economic volatility and created value in the process.

Also, despite the industry’s small size, reported deal performance on both a gross IRR and cash multiple basis is good, proving that in spite of all the headwinds, private equity firms focused on the MENA region have been able to both source high-quality investments and generate returns.

One should hence take confidence from the past experience that the region’s fund managers will be able to navigate the next wave of challenges. But there is more to the story.

While the rapidly growing youth population is a potential boon for firms focused on consumer goods, services, healthcare and education, it’s requiring governments to achieve levels of economic growth capable of putting all of these young people to work.

The region still suffers from a dearth of finance available for businesses, particularly small-and medium-sized enterprises, as well as insufficient management expertise to take companies to their next stage of development. Private capital can bridge these gaps by providing expansion capital, by helping businesses grow in line with international standards, by connecting these companies to new markets, and ultimately by creating licit opportunities for the region’s youth to earn a living in the formal economy. Government though has to play its part too. Regional policy and practices unfolding in the region at large to address this gap are promising, particularly among the influential hubs for PE and VC (Jordan, UAE and Lebanon). However, there is still ample room for advancements where acknowledgement and meaningful action prove vital.

As governments across the Middle East and North Africa increasingly appreciate this connection, they should start much more aggressively to actively engage private sector partners. Nearly all regional governments have come to realize that youth employment is critical to stability, and that they alone cannot employ the waves of young people coming into the workforce. Unless leaders get the private sector side of the equation correct-and allow the private sector to develop and drive job growth-a world of turbulence will likely ensue.

Bottom Line: Private equity remains grossly underutilized, with private equity investment as a percentage of GDP weighing in at just 0.2% for the MENA region in 2018. In an environment where newsfeeds carry more headlines of destruction than construction, private capital can be a substantial positive agent of change. By partnering with local entrepreneurs and building better businesses, the private equity industry can also help the region build a much brighter future.

Capital Access Recommendations

Recommendations for policymakers:

  1.  Design policies and programs to fit the “reality” of business: It is a fact that government policies at large are not well understood or utilized by businesses and fail to provide the competitive price, accessibility, and certainty that businesses look for when seeking capital. For these policies and programs to achieve their stated goals, policymakers should structure them to meet the specific needs of business or consider enhancing and expanding collaboration with private-sector capital providers to leverage those providers’ expertise and capabilities. This may necessitate agility and better integration to streamline efforts across, often dispersed, programs.
  2.  Expand entrepreneurial education of capital options: Even if a source of capital is a good match for the needs of business, it won’t be utilized without substantial awareness among target enterprises. Policymakers should encourage educational programs that help inform businesses, nonprofits, and government agencies of all sizes of the different capital access options, as well as their costs, benefits, and requirements. This could be a direct government effort, but it may be more effective and efficient to partner with nonprofits, global institutions and business organizations focused on improving capital access.

Recommendations for capital providers:

  1. Develop a relationship with clients: A positive relationship is a major driver of clients. It behooves one to get to know them and develop a positive relationship. This will not only help make the relationship “sticky” but will also help in understanding the needs and trends in the market, positioning providers to better adjust as the market changes.
  2.  Consider strategic partnerships: Leaders may not be able or willing to provide capital to all companies; however, even if it’s not possible to deliver on all the necessary services, through the use of strategic partnerships they can preserve the presence of a company within their respective relationship umbrella. Financial technology alone has little meaning unless there is underlying value. In order to create jobs and real prosperity, financial technology must act on other factors; and none is more important than human capital. Once again, “Human Capital” and the burgeoning of “Team Spirit” is the essence of all.

* Zana Nesheiwat is CEO of BrandZA, Inc., Partner at Blackhawk Partners, Inc.and wealth-curator charged with building valuable brand assets, originating and optimizing strong partnerships, and advancing investment opportunities that benefit all stakeholders.

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Venture Finance in the MENA Region: Challenges and Opportunities Ahead

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I recently had the pleasure and honor of participating in the Digital Mashraq Forum (DMF) under the patronage of HRH Crown Prince Al Hussein Bin Abdullah II, the Ministry of Digital Economy and Entrepreneurship in Jordan and the World Bank Group.
The high-level affair to discuss the future of digitalization in the region attracted upwards of 500 attendees from public and private organizations across 25 countries. The DMF hosted a VIP pre-reception and an immersive two-day program with 26 panels, 69 speakers, 40 startups and 22 investors on board. A commendable success to orchestrate such a powerful platform.

The caliber of men and women was unexpected, to say the least. It was most certainly a remarkable experience to be surrounded by so many educated, talented, sophisticated, pleasant, informed, ambitious, engaged and relentless humans for three days.

Although a regional event, it was without a doubt global. Entrepreneurs, companies, VCs and public officials from MENA, Europe, Asia, Africa and throughout the US all doing great things.

Back in Business: Ripe, Rich and Ready

It is no secret – The Kingdom of Jordan is on the brink of breaking through bureaucracy to bring in billions of dollars and it’s only a day away. The events taking place are defying the antiquated sentiments that postulate a lack of resources as an uncontended culprit preventing a rapid evolution to modern economic and social systems. The fact is there is abundant capital and it’s high-time this wealth is unlocked and effectively allocated to achieve its full impact-potential.

Public-Private Partnerships

Once again, it is as much about the caliber of people and companies and the ambitious agenda the DMF sets to advance as what it symbolizes. The conference concluded with the release of “Amman Communique,” announcing Jordan’s plan to launch a regulatory reform process and digital transformation strategy by the end of 2019 to improve the Kingdom’s business environment. The communique also addressed the government’s commitment to open the National Broadband Network (7,000 kilometers of fiber) for public-private partnerships (PPP).

For Jordan, the meeting was one of many recent government-backed initiatives that emphasize its commitment to back and empower entrepreneurs, create a conducive business environment, and advance robust public-private cooperation.

The Role of the Central Bank

My partners at Blackhawk and I strongly believe the Central Bank of Jordan can serve a fundamental role in leading a PPP that will open up the flood gates of capital.

Consider Lebanon, a neighboring country in the Levant, that instituted an impactful PPP model. In 2014, The Banque du Liban (Central Bank of Lebanon) introduced Circular 331 to bolster the Lebanese ‘Knowledge Economy.’ It is proving effective despite the Central Bank’s massive debt and the country’s stormy geopolitical climate.

In fact, Circular 331 which encourages commercial banks to invest in startups is clearly one of the boldest and smartest initiatives undertaken so far by the Lebanese government. For the uninformed, the Central Bank now guarantees up to 75 percent of the value of a commercial bank’s investments into a startup. That move opened up a potential of $400 million that could be invested into venture capital funds or directly into startups. Circular 331 has clearly taken it up a notch by encouraging venture financing.

This model can be similarly emulated in Jordan to open up the flood gates of capital second to none; especially given the fact that Jordan has half the Debt/GDP ratio of Lebanon.

The Flood Gates of Capital

Purposing a public-private partnership of this magnitude to create professionally managed pools of capital in Jordan will create an octopus of opportunities:

  1. More Capital: The capital injection will increase the number and variety of VCs which would in turn fund and empower more entrepreneurs.
  2. Take Jordanian Companies Global: Such program would establish new VCs of the highest caliber with qualified experience that not only meet local-standards but have the aptitude to fair-well globally was well. More globally competitive VC’s mean more globally competitive companies.
  3. Larger Pools of Capital: It will serve to develop and expand the current VC system exponentially. Most VCs in Jordan today are basically restricted, for the large part, to seed-stage. This opportunity would allocate capital to equip new VCs to mature and develop seed to later-stage companies. Larger VC pools of capital will serve to accelerate the growth and scalability of the companies they fund, positioning them compete in global markets.
  4. Empowered Entrepreneurs: With new VCs and larger funds, a whole new spectrum of entrepreneurs will have access to capital. Consider the shift in dynamics that would follow – Consider companies or entrepreneurs that don’t conform to their capital providers but are forced to comply to secure their financial survival. This desperation leads to discouragement which in turn stifles individual potential and the evolution of their enterprise. A robust VC model will pierce this paralysis and protect innovation capital, a source of national wealth.
  5. Green Light for Foreign Investment: This government-backed initiative gives outsiders the greenlight – Jordan is open for business. The blessing and support of the Kingdom boosts investor confidence, garners respect from national leaders and will certainly serve in reaching their FDI targets, probably overnight.

Looking Ahead

Make no mistake about it. At the end of the day, it all boils down to access to professionally managed pools of capital that can make a real dent in the marketplace. You can have the smartest and most educated entrepreneurs on the planet but without “smart” capital backing them, their projects are nothing but a pie in the sky. Silicon Valley is a prime example in this regard. Without Sand Hill Road backing the entrepreneurial spirit and companies of the Valley back in the early 80s and 90s, the tech giants of today would have never existed.

Just as it has in the United States, the worldwide democratization of capital will democratize industrial assets and produce an explosion of job creation the world over. The MENA region needs this more than any region in the world. And the capital revolution, which so changed America in the last third of the 20th century, is only the prelude to the other two major revolutions of the 21st century — the worldwide democratization of venture financing and of knowledge. These three revolutions, each aided by emerging technology, provide hope that the 21st century will be able to avoid the terrible Middle East conflicts of the past hundred years and become a new Age of Enlightenment. Our children won’t have opportunities unless there are opportunities for everyone.

*Zana Nesheiwat is a Partner and wealth-curator at Blackhawk Partners, Inc. charged with building valuable brand assets, originating and optimizing strong partnerships, and advancing investment opportunities that benefit all stakeholders.

Blackhawk Partners Inc. is a New York based private “family office” that is in the business of originating, structuring and acting as equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, and growth capital financings for both US and emerging market companies at all stages.

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The Unprecedented Wealth Creation Opportunity of the Cannabis Industry is just getting started

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Cannabis prohibition is going to end much faster than most people anticipated, and this will allow for the biggest wealth creation opportunities in many lifetimes. When Prohibition ends, the dam holding back the Cannabis industry will have broken, and Cannabis will become ubiquitous in virtually every aspect of our society, worldwide.

Cannabis is extremely close being federally legal in the United States. 36 states have already decriminalized Cannabis, 11 of which have fully legalized it for medicinal and recreational purposes. In March of 2019, the House Financial Services Committee approved the SAFE Banking Act by 45-15. Earlier this month, 38 Attorney Generals from 38 U.S. states and territories signed a letter asking our Congress to pass legislation to increase Cannabis businesses’ access to banks, through the SAFE Banking Act.

Days earlier, the Treasurers of 17 states issued a separate call in support of the same bill. US Attorney General Barr stated he would not use federal resources to prosecute Cannabis businesses in states where it is legal. US Treasury Secretary Mnuchin urged Congress to pass the SAFE Banking Act. And finally, most Congressmen on both sides of the aisle are in favor of this Act passing through.

Cannabis products will disrupt multiple billion industries in the US, with the biggest changes taking place in medicine, pharmaceuticals, veterinary products, wellness and beauty, sleeping aids, packaging, banking, agriculture, advertising, food, alcohol, non-alcoholic beverages, tobacco, law, textiles and fashion/clothing, plastics, biodiesel and energy, paper, construction, sports products, tourism, and many more.

Most giants in each of these industries will inevitably become involved with Cannabis and adopt it within their existing offerings, as well as creating new Cannabis-based products and services. Food and soft-drink conglomerates like Nestle and Coca-Cola will create Cannabis-infused food, deserts and soft-drinks. Alcoholic beverage companies like Anheuser-Busch and Heineken will create Cannabis-infused alcoholic beverages. Textile companies like Admiral Sportswear, Nike, and Cone Mills Corporation will create hemp-derived shoes and clothing, and on and on. Thus, the companies that are currently establishing their footprint/territory and the technology of this industry will be prime acquisition targets for these giant corporations.

In addition to disrupting these existing industries, Cannabis will also create many new industries through new health and wellness products that combine CBD and THC substances. Cannabis and CBD are more commonly being used together in the creation a new worldwide health and wellness industry with a wide variety of plant-based consumer products.

Cannabis and hemp will become ubiquitous in our world. Almost everything in our lives as we know it will have a much improved, more durable, healthier version that is created with Hemp, Cannabis and its derivatives. There will be new infrastructure, new products, new healthcare (physical and psychological) treatment, new recreational activities, new foods, new productivity, new employment, new taxes and most important of all, a new life and culture.

Needless to say, the end of Cannabis prohibition will bring forth a political, economical, social and healthcare revolution in our world. We are entering an exciting new era, where Cannabis and hemp-based CBD are rapidly becoming an important part of an active healthier lifestyle. Patients will use medical Cannabis and receive much needed relief without the fear of going to prison for it. Adults can choose Cannabis for adult relaxation for a fraction of the cost and fewer of the negative effects of alcohol. Millions of people will sleep better and have less pain, children will be able to control their seizures and veterans will manage their PTSD.

This will create a new global health & wellness industry where hundreds of thousands are employed in an environmentally responsible new industry that produces a natural product, which is truly making the world a better and healthier place. New Frontier Data estimates that the legal Cannabis market in the United States will generate nearly 283,422 jobs by 2020. This will be more than the expected jobs created in all of manufacturing, utilities and government industries.

Such an unprecedented revolution to our world, will also bring unprecedented wealth creation opportunities. Just as most people underestimate the impact hemp and Cannabis will have on our real world, most investors underestimate the enormous investment opportunities this industry currently presents.

The most misunderstood element of this industry is the sheer scale of what the global Cannabis/CBD industry will be. What was projected to be a $25 billion global market is rapidly becoming $100 billion and could well go up to $1 Trillion over the next decade.

Grand View Research has published a study that shows Cannabis could become a $146 billion market (US and globally) by 2025. Based on a 20% profit margin and a 20x earnings valuation, the market cap of the global industry will be over $584 billion. In additional, there are approximately 180 Cannabis public companies in the US and Canada. If 100 of them become $1 billion dollar companies within the next decade, that could bring the total global Cannabis market cap to $1 trillion. From an investment prospective few new industries in history have offered the investment potential Cannabis offers in 2019.

Conclusion:

The Cannabis/CBD industry is entering a rapidly expansion cycle and the current market estimates are much too conservative. Cannabis prohibition will undoubtedly end, sooner rather than later. The myriad of recent positive developments in public policy suggests this will happen very shortly. Our politicians and Congressmen have the chance to create history, by bringing a long overdue end of Cannabis and hemp prohibition. They must vote to pass the SAFE Banking Act.

Investors realize the unprecedented opportunities for wealth creation in this industry, which is just getting started. This is an exceptional time to invest in the Cannabis market, as it seems to poised for a decade of remarkable domestic and international growth. Post prohibition, the Cannabis and hemp industry will go from today’s size of $10B, to the point where it will be absolutely ubiquitous throughout our society, products and markets – this exceptionally rapid development will create exceptionally large opportunities for Cannabis entrepreneurs and investors.

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