Throughout the country, more states are slowly legalizing marijuana for recreational use. Medical marijuana is already legal in 33 states and the District of Columbia, and marijuana is fully legal (recreational and medicinal) in 10 states plus the District of Columbia so far. Several other states have decriminalized marijuana to some extent.
This cannabis legalization trend is fueling healthy growth in the global marijuana industry, and many cannabis entrepreneurs—and investors—are delving into the market. Currently, the legal U.S. cannabis market is $10.8 billion; experts project growth to $100 billion in the U.S. and up to $1 trillion globally in the next five years.
So what does all this have to do with self-directed retirement plans? The cannabis industry provides several interesting investment opportunities for investors who are including alternative assets within their plans.
Though there are several marijuana stocks you can invest in, investors who are looking to further diversify their retirement portfolios beyond the stock market can include these cannabis trade-related investments in a self-directed IRA:
- Cannabis farms – agricultural commodities and shares in crop farms have long been among the alternative assets within self-directed plans
- Processing plant or extraction business – many products use CBD oil or are derived from hemp, which requires processing and whose owners could be looking for angel investors
- Dispensary operator (for medicinal marijuana)
- Retail shop for recreational pot – these stores may sell edibles, CBD oil-infused products, vapes, sprays, and accessories
- Edibles products creator and/or distributor – candies, drinks, tinctures
- Producer of hemp-derived and/or cannabis-infused body care products or cosmetics – creams, lotions, soaps, massage oils, gels
Given that the legal cannabis trade is still in its infancy, there are cannabis-related companies, producers, and retailers that are still in early-stage mode, which could also mean private equity opportunities for investors—another way to invest funds from a self-directed IRA.
As with all self-directed investments, you as the account holder are responsible for conducting your due diligence on any investments you plan to include. As you are researching potential alternative assets for your self-directed IRA, know that our helpful team at Next Generation is here to answer your questions, assist with opening your new account, and to offer client education about this retirement strategy. Contact us via email at NewAccounts@NextGenerationTrust.com or call 888.857.8058
"The South Dakota Division of Banking has advised that assets to be transferred into or held by the accountholder’s custodial account should not include any illegal or impermissible holdings under South Dakota or Federal law, including, but not limited to, holdings of cannabis related investments or other illegal substances, illegal gambling, or illegal artifacts. Furthermore, the custodial account should not hold or engage in transactions involving illegal or impermissible holdings while Next Generation Trust Company serves as custodian.” (as of July 31, 2019)