Investing in marijuana stocks represents a great opportunity for even the greenest (pun intended) investor. Here are all the things that potential investors need to know.
By Katrina Hatchett
The role of marijuana in society, and more lately in business, has never been simple, but in recent times this natural product has stepped more and more into the mainstream. Now, in the United States, more than half of the 50 states recognize marijuana for medical purposes, and there is a growing acceptance of its recreational use too (marijuana is now legal in 10 States, as well as DC).
In Canada, marijuana has actually been legalized for recreational use as well as for medical purposes. In the rest of the world, there are countries which have legalized marijuana, decriminalized it, or have relaxed rules with regards to personal use and cultivation. Medical usage is now accepted in about a quarter of the world’s countries, with many more having legalization on the agenda.
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What does that mean? As well as advances in the treatment of pain relief and other medical symptoms, and the cultural aspects which surround recreational use, there is now a growing investment industry around marijuana. In fact, investing in marijuana stocks represents a great opportunity for even the greenest (pun intended) investor. Here are all the things that potential investors need to know.
Not all stocks are the same, so choose one that suits your strategy
Every potential investor must, first of all, think about exactly what they want for their investment: this is true no matter you are looking to invest in. Are you looking for a quick pay-day, or are you more concerned with stable growth over a longer period? Investing in marijuana stocks offers all sorts of potential returns, so conduct immaculate research first.
The cannabis industry has grown to such an extent that it now includes a wide-ranging and eclectic assortment of businesses: from hospitals and pharmaceutical companies to concrete manufacturers, believe it or not. Many of these businesses are looking for investment capital, but as you can see they may all share a reliance on one particular product, but that is where the similarities end, so this is far from a catch-all topic.
Use an investment broker and a legal expert
The decision to go with a professional broker may depend entirely on the strategy you wish to employ, plus the size of the investment you want to make. If you are considering putting a major chunk of your capital into marijuana stocks, it is definitely worth getting professional advice, which may also include legal advice on the various regulations which exist. Remember that the US Federal Government still identifies marijuana as an illegal substance, so you need to understand very well what you can and cannot do.
Pay close attention to the market
This is a piece of advice that rings true once more for whatever you may be investing in, but with it being such a delicate subject, you really must keep your ear to the ground with regards legal updates and changes in regulations. Of course, it’s good news for investments if more countries decide to legalize cannabis for both medical and recreational purposes, so you will need to ascertain what the likelihood of that happening is in different territories.
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Then there are huge market players who are looking at new ways to use cannabis. For example, drinks giant Coca Cola is examining ways to produce marijuana-infused drinks, so stock prices are sure to been affected by such a move.
“A great piece of advice is to look at the marijuana companies that major companies are investing in because that is usually a sign of a solid investment,” points our Eve Stoddart, a marketer at Write My X and NextCoursework.
Never forget the golden rule
No matter what you are investing in, the golden rule is always to diversify your portfolio. The oft-quoted golden rule is 10%: never have more than 10% of your capital invested in one stock. The same rule applies here.
“The danger with investing in marijuana stocks, a little like cryptocurrencies, is that investors will somehow treat it as ‘different’ due to all the noise that surrounds it. That is a mistake. Look at any investment with the same, objective eye as you would when entering any market,” urges Terry McNeil, a project manager at BritStudent and Australia2write.
Katrina Hatchett is a lifestyle blogger at Academic Brits with a particular interest in the art of communication: a field in which she has cooperated on many projects. She is a regular contributor at Origin Writings, as well as a blogger at PhDKingdom.
