For many investors, the emergence of cannabis is a blessing. This “green gold” is fast becoming the hottest form of investment today, even surpassing the popularity of cryptocurrency. Many wealthy business leaders, celebrities, and investors have hopped on the medical marijuana investment bandwagon.
Welcome to the Green Gold Rush
And why not? Even market analysts are extremely bullish on the cannabis market. A recent study by Market Study Report, LLC showed the medical marijuana market is seen to skyrocket by a CAGR of 16.82% within 2019 and 2024. Another report, this time by ArcView Market Research and BDS Analytics, projected that the weed market is poised to reach $32-billion mark as early as 2022. No wonder investors are scrambling to take part in the meteoric rise of the cannabis industry.
Aside from buying marijuana stocks products from various IPOs and already established marijuana companies, entrepreneurs have devised multiple ways to draw investors in anticipation of the boom in this sector. With the recent launching of AdvisorShares Pure Cannabis ETF, there are now two cannabis-focused exchange-traded funds in the market today. Also, there are now apps like Stash that allow people to buy and trade marijuana shares for as little as $5. Programmers have even developed a cryptocurrency named Potcoin which is exclusive to weed investors.
Cannabis Investment – Marijuana Stocks
Excited to invest in marijuana stocks? Not so fast, advised analysts. Even as many prominent and ordinary people are pouring their money on the wonder plant, experts caution investors, especially newbies, to take a more in-depth look at the stocks they are buying. Market experts have identified some steps that you should take note of if you want your cannabis investment to succeed.
1. Study the types of marijuana products
Cannabis products as classified under two broad categories: medical marijuana and recreational marijuana.
Medical marijuana currently is legal in 33 U.S. states as well as in many countries across the world. People who want to buy these products need to present a prescription from an authorised doctor or healthcare provider. Most doctors prescribe cannabis products such as CBD oil for anxiety, depression, chronic pain, and stress. Other states require buyers to show a Medical Marijuana Card.
On the other hand, recreational marijuana is only legal for adult use in nine U.S. states and the District of Columbia. Smokers of marijuana products prefer to experience the psychoactive attributes of THC.
2. Know the Different Types of Marijuana Stocks
Stocks are divided into three types:
- Pot growers – These are companies that cultivate the crop, harvest it and distribute the end products to consumers.
- Weed-focused biotechs – These are firms dedicated to developing medicine and other products from cannabinoids.
- Suppliers of ancillary products and services – Some enterprises provide products and services to support marijuana growers
3. Know the Risks Involved
Even though the cannabis industry is proliferating, it does not mean it is already immune to huge losses. Like any investment, you need to prepare the risks, including:
- Legal and political issues – Debates about the legal status of cannabis among U.S. politicians are still ongoing. And even as medical marijuana has been legalized in many states, pressures and decisions from the White House have an enormous impact on the weed industry.
- Imbalances in supply and demand – Prices of marijuana stocks can change depending on the supply of the plant and the number of people who are willing to buy them. Developments within the U.S. and around the world can change the supply/demand balance. So as an aspiring investor, you should monitor the overall market.
- The performance of the company – Generally, established companies with high market capitalization pose a lower risk than newcomers. But since the cannabis industry is relatively new, even the established ones can be threatened by start-ups. Hence, you need to constantly monitor the developments of the market or seek help from analysts and experts.
Given its media exposure and impressive growth, investing in marijuana can be a boon for your finances. But if you are not doing your homework, you might lose your hard-earned money in an instant. So, study the market intensively to get good returns.