Is it a Good Idea to Invest in Cannabis?
As legislation continues to make marijuana - both medical and recreational - legal throughout the United States, the cannabis industry is rapidly becoming one of the most lucrative fields of business in the nation. In 2020, cannabis sales across the United States reached a staggering 17.5 billion dollars in revenue. With cannabis companies raking it in, many residents are asking themselves how they can get a piece of the pie.
To date 36 U.S. states, including Missouri, have medical marijuana programs, allowing residents with a medical card to purchase, possess, and consume cannabis. Eighteen states have legalized recreational use. As the demand for relief continues to rise, marijuana companies are poised to profit. This has many investors considering the pros and cons of investing in stocks of medical marijuana companies.
Forbes Magazine attributes the 46% increase in cannabis revenue in 2020 to two things - the pandemic, and the increased number of states legalizing marijuana. As lockdown bans are lifted, the cannabis trade is showing no signs of slowing down. Here are some of the pros and cons to consider if you’re thinking of investing in marijuana stocks:
Getting In Early
Wouldn’t it be nice to be able to go back in time and invest in Apple Computers or Netflix? The legal marijuana business is in its infancy, and expanding at a rapid rate. Until recently, cannabis stocks weren’t even allowed to be traded on American stock exchanges like NYSE and NASDAQ. Now, the number of options for investors to get in on the marijuana bandwagon gets bigger every day.
Survival of the Fittest
Investing in the stock market is a risk. You’ll want to do your research, especially before making any large investments. The cannabis industry is booming, but not every business is built for the long haul. As consumers have more options, some companies may find their shares dropping if their products don’t have what it takes to stand out in a competitive marketplace.
Some big money names are already starting to emerge in the cannabis industry. Marketwatch recently listed nine of the largest U.S. marijuana companies. These multi state operators already have market caps in excess of one billion dollars apiece.
If you are new to investing, whether in the marijuana field or another industry, you’ve got options. You can buy and sell publicly traded stocks, such as those on the New York Stock Exchange of NASDAQ. These stocks can be bought and sold through a stock broker, or an online service, such as E Trade or Robinhood.
Another option is to invest in Exchange Traded Funds, or EFTs, which allow you to buy multiple stocks at once.
Diversify and Look to the Future
It’s easy to see which companies are already making big dollars and put your money there. But, investments aren’t about where a company is now. They are about where a company is heading. The industry is still in an early stage, so things can be difficult to predict. Diversifying and spreading your investments over several areas may be something to consider.
The Motley Fool, in their handy beginner’s guide to investing in the marijuana industry, categorizes cannabis investments into three types of companies: marijuana growers, cannabis-focused biotechs, and providers of ancillary products and services. Investors may want to become an expert in one of these areas OR diversify their portfolio to include stocks that focus on all three.
Keep Your Eyes on the Money
The legal marijuana industry may be in its infancy, but the investment industry is well-established and full of experts who know how to follow trends and make smart money choices. Staying informed as you go is a major key to success. Once you’ve made an investment, your job has only begun.
Be prepared to sell and reinvest as the industry changes. Although the cannabis market is poised for tremendous growth, it may not always be predictable. To be a savvy investor, you’ll need to be ready to pivot with an eye on the future, wherever it leads.
Ready to invest in your own relief?
Medical marijuana is legal to Missouri residents who qualify. If you still need a medical card, our team of physicians are prepared to take you through a quick and easy evaluation. CLICK HERE to schedule an appointment with a marijuana doctor online or give us a call at (877) 303-3117.
Doctors Who Care. Relief You Can Trust.
At Missouri Marijuana Card, our mission is helping everyone achieve wellness safely and conveniently through increased access to medical marijuana. Our focus on education, inclusion, and acceptance will reduce stigma for our patients by providing equal access to timely information and compassionate care.
Call us at (877) 303-3117, or simply book a medical marijuana evaluation to start getting relief you can trust today!
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