How to invest in cannabis stocks
Investing in cannabis has become a point of contention in the investment world. Many statutes provide penalties for the sale, cultivation, or possession of weed. The use of this drug is currently fully legal only in Uruguay, Georgia, South Africa, Canada, and Mexico. In the US, although weed is not legal at the federal level, recreational consumption is legal in 19 states, including Washington, CA, and NY.
Today there are more and more countries that are ready to cast aside prejudices and appreciate the economic benefits of investing in cannabis. The global cannabis market could reach $70.6 billion by 2028, according to Grand View Research.
If the United States legalizes weed at the federal level, then the growth of the industry will be even greater. Now, many investors see hemp as an important possibility to increase their wealth. This is primarily due to the fact that the legalization of weed, in fact, has become a global trend. So if you decide to invest in marijuana, consider buying california dispensaries stocks.
Cannabis Investment Potential
The Brightfield Group, a company that specializes in market research and analysis evaluative this direction positively. The Brightfield Group predicts cannabis sales will reach $43 billion by 2025. This area has every chance to compete with the alcohol industry if by 2030 it reaches $100 billion. First of all, this is due to the fact that young consumers are quickly switching from drinks to marijuana.
It is possible that the cannabis industry could grow to $200-500 billion in the long term, according to an analysis by Canopy Growth and CNBC reporting. Meanwhile, spending on legal marijuana in Canada for the first time in history has exceeded spending on the black market.
In 2018, the Government of Canada legalized recreational cannabis. But even so, consumers continued to turn to the black market because of the high taxes. Finally, in 2020, the Canadian government improved the legal framework for the purchase of weed, which led to a change in consumer habits and as a result, legal marijuana spending increased among consumers.
Growing medical and recreational drug market
The legalization of hemp and preparations based on it, which are used for medical purposes, have revolutionized the pharmaceutical industry. Cannabinoid therapy really helps, no matter what the patient suffers from.
With legalization in a few markets, medical weed is expected to grow at a steady pace. For example, in 2020, the chronic pain niche accounted for the largest stock of the cannabis market revenue. Over the past year, awareness and social acceptance of marijuana’s medical use have increased.
The mental disorders segment is also expected to contribute to the growth of the industry due to the increase in patients with stress and anxiety.
The rise in medical demand for cannabis has led to the proliferation of huge production “farms” where the plant is grown and harvested under strict control. For example, in 2020, Colorado billed an average of $175 000 000 every month from recreational marijuana sales. Of this amount, 32 million were taxes for the state government. In turn, California’s weed sales have generated US$1 billion in revenue for the state.
In fact, the US government could be one of the main stakeholders in the federal legalization of weed.
How to invest in weed?
Investing in weed involves buying stocks in companies that produce it. Companies that grow marijuana are the most preferred option for those who decide to invest in cannabis. It is also worth paying attention to biotech corporations studying its benefits, and, finally, auxiliary companies. The last group deals with the logistics, transportation, and packaging of weed. Thus, the opportunities for investing in the cannabis market are quite extensive.
But how to invest in marijuana stocks? Here are 7 steps that will help you become a successful cannabis investor:
- Explore different types of marijuana;
- Find different types of hemp companies;
- Learn the risks of investing in the cannabis industry;
- Appreciate the benefits of investing;
- Check out the best stocks;
- Invest in selected cannabis companies;
- Keep an eye out for changing marijuana industry dynamics.
Choose only the best cannabis stocks, to get the most out of their purchase. However, be aware of the risks.
Risks of investing in weed
The number of marijuana outlets is growing rapidly. For example, in Colorado, their number has already exceeded the number of Starbucks. The legalization of cannabis will accelerate the development of the network and the growth of profits for companies.
The consequence of this rapid pace of development will be a large number of new companies trying to break into the market. This will lead to fierce competition in which the strongest will survive. Therefore, it is safest to invest in large companies in this segment.
Another risk for investors is the overvalued value of stocks. Against the background of the growth of the entire industry, even the stocks of loss-making companies will be in demand. When choosing an issuer for investments, it is necessary to pay attention to the issuer’s financial performance.
Today, investors are scrutinizing companies that produce and sell marijuana to find ways to invest in the emerging sector. According to forecasts, this market will grow, and therefore now is the most suitable time for investment. It is likely that the growth will not be as fast as in 2018, but now there is an opportunity to buy stocks at a very low price. Knowing how to buy cannabis stocks, do not miss the opportunity to invest in a promising area.