Cannabis markets are growing crazily globally. In 2018, cannabis spending was at $12 billion. By 2022, this number is expected to rise to $31.3 billion. With this kind of growth, you cannot blame investors for wanting a piece of the pie. How do you properly invest in cannabis stocks?
There are seven major steps. Cannabis products are grouped into two categories: recreational marijuana and medicinal marijuana. There are more specific types under the two categories. Medical marijuana is legal in many states in the US and other countries around the world such as Germany and Canada. For you to acquire medical marijuana, you need an authorized healthcare provider to prescribe it.
Medical cannabis is inhaled by smoking vaping concentrates or dried leaves. Other options include applying marijuana creams/lotions or drinking marijuana beverages. Cannabidiol (CBD) is the most common medical marijuana product. Other drugs approved by the FDA include Syndros, Cesamet and Marinol.
Recreational cannabis is legal in Canada, Uruguay and 9 US states. Cannabis stocks come in different types. The following are the three main ones. Cannabis growers and retailers: Canopy Growth and such like companies cultivate cannabis, harvest the product then distribute to customers. Others operate retail stores and sell recreational/medical marijuana.
Cannabis-focused biotech’s: the biotech’s are more focused on creating cannabinoid drugs. Providers of ancillary services and products: these are businesses that support those that grow marijuana by offering services and products such as lighting systems and hydroponics products. All investments come with their risks.
Here are the risks associated with marijuana stocks. At the federal level in America, the sale of pot is illegal. This means that your business is at risk if you are operating in the US. Cannabis stocks are highly valued depending on how they are expected to grow in the next few years. A big supply glut may be experienced, especially in Canada.
OTC (Over the Counter) Stocks
These stocks are very risky.
Know What You Are Looking For
Cannabis stocks are just like any other stocks in many ways. Assess the growth strategy of the company, management team, and competitive position. Do not forget to examine the cash position too. If investing in Canada, check the company’s international operations. This is because of a possible supply glut. Assess the Top Marijuana ETFs and Stocks. Here is a list of cannabis stocks that you may want to consider. They are among the top.
- Canopy Growth Corporation (NYSE:CGC)
- Aurora Cannabis (NYSE:ACB)
- Cronos Group (NASDAQ:CRON)
- GW Pharmaceuticals (NASDAQ:GWPH)
- Scotts Miracle-Gro (NYSE:SMG)
- ETFMG Alternative Harvest ETF (NYSEMKT:MJ)
Cannabis stocks are not the best for conservative investors. However, even if you still have a high-risk tolerance, you should be careful. Start small and increase the cannabis stocks as the industry and business grow. The cannabis industry is changing rapidly. Make sure you monitor it frequently and closely.