While cannabis investment options include investor groups, incubators, direct investments and crowd-funded solutions; returns are highly skewed with over 80% typically concentrated in the top 10% of investments. Challenges in this space include fragmentation, opacity, innovation, adoption and a rapidly changing regulatory landscape. Active managers have a distinct advantage in emerging markets, and as such a professionally managed solution is often an attractive option for effective cannabis alpha capture.
Importance finds a way; its absence finds an excuse
Diligence: Investment returns tend to be correlated to conducted diligence, and managers with venture and emerging market experience can add value beyond their fees from a sustainable return perspective. In aggregate, more hours of diligence mean greater returns over time.