As enthusiastic private investors ourselves, we are always on the lookout for new and exciting investment alternatives, which is why we stumbled across crowdgrowing. Early on, we started trying out several crowd growing platforms and can therefore allow ourselves a personal assessment and evaluation. As a crowdgrowing portal, we see ourselves as tipsters and therefore want to find the best providers.
For this purpose, we test and compare selected crowd growing platforms and clarify whether and how you can build up a passive income with crowd growing on the side. We compare both opportunities and risks to help you make an initial assessment. First, however, our crowd growing best in class list for those of you who already know what this is all about or who already see themselves as crowd growers.
Crowd growing platforms
ⓘ Please note the risk notice in the event that crowdgrowing is classified as an asset investment and does not qualify as a service or can be allocated to growing management services: The acquisition of this asset investment is associated with considerable risks and can lead to the complete loss of the invested assets. Furthermore, the following applies when using our calculators: The promised return is not guaranteed and may also be lower. Furthermore, even if individual providers or products are mentioned, the statements, comments and other content contained in this article should not be understood as investment advice and do not constitute, either directly or indirectly, a recommendation or solicitation to buy, hold or sell a product or advice in this regard. The tipster can therefore never replace a visit to an expert. Furthermore, we would like to point out that our list of best performers is based on a personal assessment and can therefore represent a limited selection of the market.
What does crowd growing mean?
The term crowd growing (sometimes also crowdgrowing or e-growing) emerged only in recent years from various marketing campaigns of the cannabis startup industry. The investment term is composed of “crowd” for a larger number of people and “growing” for the cultivation of cannabis plants. With the “e” for e-growing, the focus is on the electronic or virtual component behind this crowdfunding concept. This is because the “crowd” will normally only be able to see their own plants virtually (sometimes also via installed cameras) in a growing dashboard (also called grow room or green house). However, on-site visits to the growing companies are also possible in some cases (more on this later).
It can be argued that crowd growing is subordinate to crowdfunding and uses crowdfunding for the necessary investments to grow legal cannabis. In practice, this would mean that many private investors (crowd growers) give money so that a cannabis cultivator (grower) can then use it to make necessary investments to be able to grow. Instead of interest on the invested capital, the crowd growers (also called e-grower) receive in return (pro rata) harvest yields of their own cannabis plants. They can either sell these via the grower’s distribution network or, in the case of some providers, optionally use them for their own needs (no psycho-active substances). In the latter case, it is a kind of “natural dividend” as monetary consideration (nonmonetary transaction), which is typical for crowdfunding projects. However, we must point out that the classification does not yet seem to be finally clarified. This is also due to the fact that crowdgrowing providers usually argue that they are merely providing a service and that they would therefore not be entering the financial transaction business. Other crypto-harvesting models are even more difficult to assess here because NFTs are used as a vehicle to securitise harvesting claims. Therefore, crowdgrowing is currently in a grey area. It remains exciting to see how this will be assessed by the financial supervisory authorities in the future.
Fun factor through gamification
E-growing is supposed to be fun and therefore probably feels a bit like “Hemp Farmville for adults”. The platforms are fully relying on the gamification trend here – with success in our opinion. It’s actually fun to see how the plants thrive virtually. When you log in as an e-grower, you first see your own “greenhouse” or “growroom” as your personal dashboard. It all seems very playful. However, too much gamification can also distract from the actual risk behind crowdgrowing and should even raise scepticism. That’s why many providers focus on transparency and enable viewings or even install cameras to send positive and confidence-inspiring signals. Because one could often come to the conclusion: Too good to be true. Nevertheless, the fun factor of crowdgrowing should not be underestimated.
Terms and purchase prices
The minimum purchase prices differ significantly between the platforms. In general, one can distinguish between the more expensive and mostly lifelong indoor plants and the one-time harvested, significantly cheaper outdoor plants. The runtimes and cultivation cycles can also differ depending on the provider. This also means that not every crowdgrowing platform suits every customer. It is important to understand that money is extremely illiquid when buying from such platforms. This means that the money may be tied up for a long time. Many providers are already responding to this criticism and are planning or already offering a marketplace through which one can trade purchased plants. This at least addresses the problem of illiquidity and can compensate for it.
Business case behind crowdgrowing
Cannabis boom expected due to legalization
According to a survey of the European cannabis market, experts in the cannabis industry expect the market for legal cannabis in Europe to grow rapidly. Here, it is assumed that the market will increase by around 70% per year to a market volume by sales of 3.2 billion euros in 2025. For comparison: In 2020, the market volume was only 231 million euros. In the following chart, you can see the projected quasi-exponential development of legal cannabis sales.
In addition, increased global cannabis legalization can be observed. It can therefore be assumed that the use of cannabis containing THC will also be further decriminalized in the coming years – also in Europe, especially in Germany. The new German federal government has also already taken a position on this and would like to legalize cannabis consumption in Germany. Crowd Growing is trying to anticipate this boom by building capacities now with the help of crowdfunding. Initially, however, the main focus is on the cultivation of legal (non-psychoactive) cannabis – mostly in the form of cannabidiol (CBD) or cannabigerol (CBG).
Here you can take a tour watching the largest cannabis growing facility in N.J. as an example how it works in principle:
Currently still illegal psycho-active cannabis with high THC content offers significantly higher margins and could also ring the cash registers of crowd growers as soon as licenses for cultivation are granted. Therefore, one can speculate on this market development through crowd growing and participate and earn from it in the future. However, no reliable forecast can be made as to when the aforementioned catalysts will actually occur and thus make crowd growing much more attractive.
Business model behind crowd growing platforms
Commercial cannabis cultivation usually requires larger investments in order to be able to cultivate plantations (outdoor) or to equip grow rooms (indoor). In addition to material investments, licenses and know-how for the cultivation of cannabis are also required. This all costs a lot of money – especially in the early stages. But where does the money for these necessary investments come from if classic banks are reluctant to finance cannabis business models? This is where crowd growing, as a sub-form of crowdfunding, is the solution to the problem. Here, cannabis cultivation startups (also known as growers) leverage the power of crowd funding to close financing gaps and fund growth.
The e-grower receives no interest on his invested capital but shares in the grower’s harvest yield. The grower in turn uses his distribution network to export the harvested cannabis and cannabis products to export and domestic markets. In some cases, the cultivation takes place at the grower (both indoor and outdoor) itself or there are partnerships or contracts with external plantations (subcontractors). In the latter case, however, the crowd growing platform then acts only as a mediator and seller. In the following illustration, the business model can be graphically reconstructed:
Generate passive income with crowd growing
In our opinion, crowd growing can currently generate an attractive passive income. But before you think about investing blindly: Please recap the business model graphically described above. You should understand how you can earn money passively with crowd growing, how the passive income is divided and what you need as a crowd grower for it. In our next illustration you will see the exact breakdown of the potential passive income you can generate with crowd growing.
Participation in harvest yield or profit share
First, you provide the grower (cannabis startup) with money and thus close a financing gap for necessary investments. This means that you not only make an advance payment, but also bear the risk of a possible insolvency. In return for the capital and risk you provide, you get a share in the harvest yields directly or in the profit from sales. As a rule, the growers deduct additional costs for electricity and personnel for harvesting and renewal of the plants before the net yield is then shared.
So depending on the grower, you will regularly (about every 3-4 months) participate in the harvest yields without doing anything (passive) for it. However, this only applies to lifetime sites, where the harvested plants are automatically renewed. For plant purchases without renewal you have to become active again after harvest and buy new cuttings. The system varies here depending on the crowd growing provider.
Commissions through direct sales
In addition to regular harvest shares, you can boost your passive income by recruiting new crowd growers. Some growers cannot use performance marketing via social media due to restrictions related to cannabis. Therefore, they turn to multi-level marketing (MLM). Yes, alarm bells should always go off first with MLM systems. It is important to take a close look at the remuneration system. It is important to check whether the MLM system is “healthy” and therefore reputable. Here we make sure that both the total commission possible in percentage terms and the MLM levels are limited. Thus enough margin should remain, so that the enterprise can exist also in the long term on the market. This is also the best way to distinguish serious MLM from illegal pyramid schemes. Just ask yourself: Can the system pay for itself or does new money always have to flow in?
MLM commissions are divided into two parts. First, you receive a one-time commission (initial commission) when someone you have recruited buys a plant or a pitch after successful registration. In addition, you get a small share of their future harvests. However, these commissions are paid by the grower and have no disadvantages for the recruited person. In case of doubt, the new crowd grower you recruited will not notice anything about the commissions.
Test criteria of crowdgrowing platforms
Pre-defined test criteria are important so that we are able to compare individual crowd growing platforms with each other and thereby find a crowd growing benchmark. Here you can find our most important criteria for our crowd growing test:
Year of foundation and location
In order to be able to estimate how experienced the people behind the crowd growing platform are, we take the founding year as the first anchor for our assessment. Here, we can quickly see who belongs to the first movers and who has only copied or expanded an existing business model. In general, competition stimulates business. This also applies to crowd growing. That is why we are also looking forward to new platforms. However, we consider already established platforms to be safer. These providers already have a certain track record and can therefore be assessed and evaluated much better by us, because there are already many experience reports. The location, in turn, can provide information about regulations, necessary licenses, legality, or corporate law. The company locations as well as the locations of the plantations have to be considered. A certain proximity suggests security, because one is able to visit companies and plantations.
Growing services and pricing model
However, the most important factor for most people interested in crowd growing is probably the growing service offered and the purchase price to be paid for it. That’s why we take a close look at what the crowd growing platforms offer here. Generally, we prefer lifetime growing service (you buy once and then get a share of the profits forever). That means you don’t have to worry about anything after your purchase. This way you can really generate passive income. But there are also providers who work with limited plant renewals. These models can also be attractive. Therefore we have to put the prices in relation to the respective growing services. Growing models differ here partly strongly from each other.
Transparency and insurances
Furthermore, transparency is an enormously important issue when raising money from private investors via crowdfunding. Crowd growing platforms use different channels to communicate transparency. These can be simple update blog posts or newsletters, for example. In many cases, there are also special groups on different social media channels. Additionally, a positive trust effect can be achieved by installing cameras. In this case, you can then watch the plants grow electronically from the couch in the Grow Rooms. These measures are intended to reduce skepticism and create trust. In addition, there is also the possibility to insure the plant cultivation or the grow rooms against damage. However, such insurances are not always worthwhile and are rarely found in crowd growing.
Payment methods and payout frequency
The selection of different payment methods and especially the payout frequency also have an impact on the rating, of course. However, the main focus is on how often and how quickly payouts are possible. Another question is whether there are limits and threshold or minimum values for payouts. Of course, the processing of deposits also plays a role. However, in our opinion, payout stability has priority here. Because this stability also ensures trust among crowd growers. Furthermore, we look at how high the fees are, if any. We emphasize that the choice of payment methods is less important than the frequency. In our view, it is just a nice add-on if cryptocurrencies are also accepted as payment methods. The point is to check how regularly the platforms comply with the withdrawal requests and also process them promptly. Delays create mistrust here again and, in the worst case, can also be an early warning indicator that something is going wrong financially or administratively with such platforms.
Frontend and growing dashboard
An easy-to-use frontend remains the core of any website. However, responsiveness of the frontend is now also essential, as more and more users are using mobile devices. We therefore take a close look at the crowd growing dashboards and check how easily users can access the information they need and whether they can filter. These dashboards are called green house or grow room, for example. Do users immediately understand where to find what and how to use the dashboard? How modern and interactive are the dashboards and are they suitable as a basis for decision-making? These are all questions that cannot be ignored.
Customer support and investor relations
Customer support and investor relations are important, even if we usually won’t need it with a good crowd growing platform. However, it starts with a comprehensive FAQ and is rounded off by other contact options, such as via chat or phone. These communication channels provide more trust and therefore also have a positive impact on our rating. In addition to the different contact channels, we also evaluate the speed and quality of the answers to our test questions.
Seriousness and scam accusations
Probably the most important factor for many prospective customers will be whether the company is reputable and the managing directors and founders have a “clean slate”. Therefore, in our test we not only looked at the companies and promised returns, but also at the CEOs and founders as well as external scam allegations. To this end, however, we must say that at no time can we know 100% whether the providers are actually clean. Likewise, we cannot know whether the scam allegations are legitimate or have been raised by a competitor. The Wirecard case has led to even more skepticism among investors here – including us. After all, Wirecard was a former DAX company. Skepticism is generally very healthy and should always be maintained. Exorbitantly high returns should not ignite greed and can even be a contra-indicator. That is, that it could be scam.
Results and comparison
In the following table, we have summarized our collected and researched information for you as a crowd growing benchmark. From this information, we have derived a personal evaluation to help you decide which crowd growing platform is right for you. This gives you a good overview of the providers currently operating on the market and allows you to make a decision. Take your time and check the data carefully. We will update the data every now and then if there are any changes. You are also welcome to give us feedback if you have new information that is missing here.
Starting from 800/90 EUR
Visit on site:
SEPA, Various cryptos
Innovative concept. Own CBD products are sold. But still has to prove itself in the long term. Still limited track record and social proof from the founding team.
Visit on site:
SEPA, Cash, Bitcoin
First mover and transparent. Solid crop yields. But expensive and frequent delays. Partial production stop at present.
9 months; 5+ years
70 or starting from 600 EUR
Visit on site:
Less attractive risk/reward ratio after price increase. In addition, caution due to the EXW Wallet Scam allegation of CEO involvement (unconfirmed) and delay in payouts.
|Growing service||Lifetime||Lifetime||9 months; 5 years|
|Purchase price||from 800 EUR||2.498,64 EUR||70; from 600 EUR|
|Visit possible||Planned||Yes||Yes, Outdoor fields|
|Payment methods||SEPA, Various cryptos||SEPA, Cash, Bitcoin||SEPA, Bitcoin|
|Scam allegations||No||No||EXW Wallet|
|Referral||Innovative concept. Own CBD products are sold. But still has to prove itself in the long term. Still limited track record and social proof from the founding team.||First mover and transparent. Solid crop yields. But expensive and frequent delays. Partial production stop at present.||Less attractive risk/reward ratio after price increase. In addition, caution due to the EXW Wallet Scam allegation regarding the CEO's involvement (unconfirmed) and payout problems.|
How the crowdgrowing calculators work
Besides an indication of potential yields, our crowdgrowing calculators are also useful to find out more about the growing services offered by the providers listed here and to compare them better. Below you will find links to all our crowdgrowing calculators. Important variable factors, such as the number of plants/services/plans, the harvest time and the harvest amount, determine the expected harvest yields and the associated passive income that can be generated. In order to be able to expand the passive income even further, the option of team plants can also be activated on some computers. This shows what additional commissions can currently be earned by the respective providers through the recruitment of new team members. Some of the platforms pursue different marketing concepts, which you can compare with the calculator. In some cases, you only get a one-time share of the sales. With some providers, on the other hand, you also earn continuously from the harvest yields of your team members and can thus generate an additional attractive passive income. We then speak of so-called harvest commissions (also known as residual bonuses or residual commissions).
Assumptions of the crowdgrowing calculators
What is important when using a crowd growing calculator is that we have to work with assumptions here. Without assumptions, we cannot make any forecasts about future developments. This applies in particular to the generation of passive income and expected returns of the various listed providers. All assumptions are always subject to risks and therefore uncertain. In particular, the following factors are based on assumptions:
- Harvest cycle in days: How often is the harvest?
- Harvest yield per cycle in grams: How much does the harvest yield per plant in grams?
- Selling price per gram: At what price can the crop be sold?
We also draw on our own crowd growing experiences and the experiences of crowd growers from the community. In this way, we try to create as realistic a picture as possible and also give you the opportunity to determine these factors yourself. For this purpose, we have integrated corresponding sliders into the calculator, with which you can easily adjust the factors. It is best to calculate different scenarios (optimistic, realistic, pessimistic) for yourself in order to create a good basis for decision-making.
Calculate passive income
We have built into our calculators corresponding calculated fields that depict the potential monthly passive income. It is important to note that this passive income is only calculated on a monthly basis. In reality, the passive income only accrues after successful harvest sales. This means that a regular passive income can still be built up through crowd growing. The payouts are only spread over a few months. The main part of this passive income results from own harvest yields. A further income component is added by certain platforms through the option of acquiring team plants. This means that the total monthly passive income is made up of both own harvests and team harvests. No one has to opt for recruiting new crowd growers. This can be seen more as a supplement to the normal plants, growing plans or growing services.
Crowdgrowing calculators selection
In general, we have only included the crowd growing platforms that we have tested and used ourselves as online calculators. If other interesting and preferably reputable providers exist or enter the market in the future, you are welcome to report them to us. We will then be happy to take a look at the providers and decide whether to add them to our crowdgrowing portal.
Which calculators have we integrated so far?
Risks of e-growing
Pests, weather conditions and severe weather are normal risks for agricultural businesses. This also includes cannabis growers. Generally, cannabis plants are considered to be very robust and resilient. However, such risks cannot be excluded and are part of the business model. Crop failure insurance could provide additional protection. However, the insurance premiums would probably significantly reduce the current margins. This is why there is hardly anything about insurance on crowdgrowing platforms.
Furthermore, as with all other business models, supply and demand determine the market price. Currently, there are still relatively few crowd growing platforms, but there are of course other companies that grow cannabis and are therefore in competition. This, of course, puts pressure on prices. The industry experts, as also shown above in the business case, assume that there will be a real cannabis boom. In their opinion, supply will increase, but demand is expected to rise much more strongly. However, this is an industry-specific study that should also be questioned. In our opinion, it is difficult to assess whether we will actually see this cannabis boom and whether one can participate in its success as a crowd grower. Such forecasts are always uncertain and one should be aware of that.
The aforementioned possibility of generating passive income through MLM has a dark side: In the past, there were MLM systems that turned out to be illegal ponzi schemes. As a result, MLM systems are now viewed critically. Such an exit scam means that old investors can only be paid out with the money of new investors. At some point the system collapses and only the top levels profit. What is important here, however, is that MLM systems or structural distributors are legal and cannot be condemned across the board as scam. It is a matter of recognising whether there really is a product and customers and whether the contribution margin generated is sufficient to pay not only the marketing costs but also other fixed costs and personnel costs.
Loan forms and insolvency
Even though almost all crowdgrowing providers argue that they are offering a service, the capital you provide can usually also be seen as a participating loan (equity loan) or subordinated loan, as in other crowdfunding projects and crowdinvestments. In these cases, the lender receives a share in the profits in return, in the special case of crowd growing also optionally in the form of a dividend in kind. In the event of insolvency, subordinated loans also have the disadvantage that they are subordinated, i.e. they are only serviced after all regular creditors. Financial supervisory authorities therefore always urges caution with such forms of loans. This is also due to the fact that we are moving here in the grey capital market, which is less regulated than is the case, for example, with shares or funds (white capital market). In the event of the insolvency of an operating company, crowd growers will in all likelihood lose out, as no revenue or profit is generated and they will only receive subordinate satisfaction in the event of the liquidation of the operating company. This also means that the agreed consideration is no longer available. In our view, the capital is lost in this case and we are talking about a total loss. That is, of course, the worst case.
High profitability and risk premium
With a purchase on a crowdgrowing platform, one primarily supports the growth financing of the cannabis start-ups behind the platforms. This means that you initially pre-finance or cross-subsidise the business model and in return receive a share of the harvest yields. Closing the financing gap could thus also explain part of the high profitability, if one understands this pre-financing component as an additional risk. However, this should make it clear: crowdgrowing is associated with considerable risks. The far above-average crop yields are matched by a correspondingly high risk. Therefore, we understand the high crop yields as a premium to compensate for our far above-average risk. In our opinion, a total loss when participating in crowdgrowing is therefore also possible at any time and with any provider. Promised percentage returns in the high double-digit range should always make people sceptical – including us. Therefore, we also warn against some possibly black sheep in the crowdgrowing scene. In general, caution is advised when the money is perceived to be “lying on the street” and little or no attention is paid to possible risks.
Crowd growing as an investment alternative
Crowd growing as a sub-form of crowd investing or crowdfunding is suitable for cannabis enthusiasts and investors with an affinity for risk who are speculating on a boom in the cannabis market and want to build up passive income on the side. However, it should be clear to everyone that crowd growing is one of the very risky crowd projects. Everyone must ask themselves whether the potential harvest yields represent an appropriate risk-reward ratio against the background of the possible total loss. One should not allow oneself to be misled into making above-average purchases by the sometimes high harvest yields indicated by the providers. The principle of “greed eats brains” applies here. We are therefore of the opinion that one should only invest an insignificant amount of money, if any, as “play money” in crowd growing platforms as part of one’s personal portfolio management. In the best case, however, this play money should be diversified across several providers in order to reduce the platform risk in crowd growing. Buying growing services or cannabis NFTs rounds off a portfolio with a bit of fun. Even though high returns are sometimes quoted, you won’t get rich from crowd growing. In our opinion, the core of every portfolio should consist of solid investments, for example implemented via ETF strategies. If you are still unsure after this tip, you should look for a professional investment advisor who can help you with your decision.
ⓘ When considering our personal opinion and the final conclusion, please be sure to read the introductory risk note.
Frequently asked questions about crowd growing
Crowd growing is a variation and niche of crowd funding and allows private investors to participate in the cultivation of cannabis. In return for the financing, the mostly young companies in the cannabis sector distribute pro rata profits or harvest yields to investors as monetary consideration.
Crowd growing is usually legally unproblematic, as the platforms only cultivate medical and not psycho-active cannabis. However, if plants with a higher THC content are also cultivated at a later stage, a natural dividend should be waived if the legality in the home country is still unclear.
Depending on the interpretation, a receivable, service or NFT. In our view, crowdgrowing, analogous to other crowdinvestments, usually involves participatory loans (equity loans) or subordinated loans, which are thus assigned to the grey capital market. The lender receives a share in the turnover or profit in return for the financing. However, regulation is less strict here and allows for leeway. Furthermore, growing services can also be understood simply as services or “growing management services” for the legal cultivation of cannabis. At least, this is how the crowdgrowing platforms argue. There are also NFT models that digitally securitise harvest claims. There are currently discussions about this in the crowdgrowing scene. The German financial supervisory authority has also intervened in the prominent examples of JuicyFields and, most recently, Salvatara Crowd.
Interest and (interest-like) profits, including monetary consideration such as dividends in kind, on an equity loan are subject to capital gains tax withholding. These taxes are not automatically withheld by the crowd growing platforms. Investors must take care of the correct taxation themselves. We assume that tax must already be paid on the sale and not only on the actual payout. In the case of monetary consideration (dividends in kind), we assume that the actual delivery is a tax-relevant event. However, we cannot and must not give tax advice and therefore advise you to consult a tax advisor. Additionally, personal taxation is based on national law and, therefore, unique and not comparable throughout different countries.
In case of insolvency of an operating company behind a crowd growing platform, the investment would probably be treated as a loan (with subordination). Thus, one belongs to the creditors and one will be satisfied (subordinated) in case of liquidation. Thus, in our opinion, one can assume a total loss.
Alternative passive sources of income
Are you interested in more ideas than just crowdgrowing on how you can build up passive income on the side? Or is crowdgrowing simply not for you? Then we have compiled alternative concepts, platforms and providers for you here, with which you can build up additional passive income:
Participation in crowd investments
Crowd investing (refer also to crowdfunding) allows you to participate in the purchase of different assets that provide you with cash flows or increases in value. P2P stands for “peer-to-peer” and means, especially in lending, that the loans are granted by private individuals to private individuals. Strictly speaking, this takes away part of the lending business from the traditional banks. However, it is important to note that defaults or write-offs can occur in lending and also in other crowd investments. This higher risk is also reflected in the stated high returns of 12% and more per year in some cases.
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