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How To Invest in Cannabis Stocks
Investing In Marijuana Stocks
Whether you’re a one-time cannabis user or a longtime pot smoker, one of the fastest growing emerging markets in the world today is the legal weed market. I believe most people must be wondering how, but hey look! According to a 2016 World Drug Report, it was discovered that about 182.5 million people (3.8%) of the world’s population are cannabis addicts.
Out of these, about 22.2 million are Americans. Now, with nearly half of the U.S. states having legalized cannabis for medicinal and recreational use, this number is definitely expected to rise in the near future. Looking at Canada, new laws have been passed legalizing cannabis for both recreational and medicinal use.
The results: the results are nothing short of a rapid growth in the cannabis industry which is expected to grow up to $40 billion by 2025 and about $100 billion by 2050 if all 50 states in the U.S. legalize this “royal herb”. This simply means that the golden doors will soon be wide open for billions of dollars to flow in the already legal marijuana industry.
Businesses in the cannabis industry
With the continuing legalization of cannabis in most states of the U.S. and Canada alike, more and more companies are getting into the market and are promising potential investors of possible growth once they capitalize in this industry.
The rapid growth of the cannabis industry has paved way for multiple companies to invest in technologies, product development and offering services without touching on the cultivation and distribution of cannabis itself.
With such businesses (that operate under the umbrella of cannabis), more and more investors will definitely be lured to invest in cannabis making the industry-wide for potential investors to capitalize without worrying on the potential risks.
Now, having said much about the growing cannabis industry, lets now highlight some creative ways you can rely on to successfully invest in the marijuana market.
The Agricultural Technology (AgTech) is one industry that has really thrived following the legalization of cannabis in most states in the U.S. and Canada. As the industry grows, there’s the need to develop newer equipment, technologies and supplies that will be required to enhance the cultivation of cannabis.
As the sector grows, competition and the need to harvest more yields with lower costs will definitely be essential. Therefore, investing in AgTech companies will definitely be a perfect move as these companies deal with providing greenhouses, farming products, horticultural expertise, fertilization system and LED/lighting technologies among others.
Ancillary products and services
Another way of sidestepping the legal problems related to cannabis and investing entirely in the industry is by focusing on companies that deal with packaging, marketing, branding, securing and offering insurance to cannabis farmers.
Although cannabis has been legalized in most states, the issue of branding and packaging is strictly limited to certain levels. Therefore, investing in businesses that complement the marijuana industry as a whole will be a perfect move for you. Just to mention, some of the dominant companies you can invest on in this sector include;
- Choose a dispensary: following the legalization of cannabis in most U.S. states, investing in a marijuana dispensary and setting up stores in different locations can help you reap huge rewards.
- Security companies: another way is investing in security companies that offer technological security to cannabis businesses. One of the best companies you can invest in is Armaplex. With its headquarters located in Santa Monica, this company sells and installs digital cameras, security plans and armed guards when transporting funds or cannabis related valuables.
- Kush Bottles: this is another company you can try investing on. Founded in 2010 by two basketball teammates, Kush Bottles manufacturers weed canisters, grinders, baggies and glass pipes among other valuables.
- Clark Neubert: with their offices located in Santa Monica and San Francisco, this law firm is highly proficient in the cannabis space thus their nickname “lawyers for the green frontier”.
Another way of reaping huge benefits from the marijuana industry is investing in those companies that only focus on biotechnology. You see, following the legalization of cannabis for medicinal purposes in Canada and most U.S. states, most businesses have splashed millions of dollars in this segment in a bid to develop cannabinoid medicinal products.
Since the cannabis industry is a mammoth business surrounded by a myriad of complex laws and risks, most companies have stepped up into the arena to respond to the complexity of the rules and regulations pertaining to your specific jurisdiction.
Most of these companies offer full assistance to cannabis investors related to licensing, zoning or offering information related to industry-specific risks and uncertainties. Investing in such companies will help you grow really fast as the overall cannabis industry grows.
Cannabis products and extracts
Another clever way of investing in marijuana is putting your money in companies that deal with cannabis extracted products. A big trend in today’s market, most companies are investing in cannabinoid products, edibles, drinks, topical and concentrate in place for the traditional vaping and smoking cannabis.
The last potentially intriguing way of investing in marijuana is by targeting those companies that grow and sell organically-grown cannabis either to other companies or directly to consumers. In addition to that, you can invest in companies that offer products and services within the cannabis bracket such as companies focused on gardening and lawn care and those focused on greenhouse, LED and other lighting technologies related to cannabis.
Although the cannabis industry is one of the fastest growing industries in Canada and parts of North America, there are so many risks that lie ahead of this multimillion-dollar investment. Before we conclude, let’s just shade some light by highlighting several major risks you need to be aware of.
- No guarantee of success: although this industry has thrived over the years, there’s no guarantee of its success in the future.
- Government regulations: different jurisdictions offer different state rules and restrictions related to packaging, distribution and advertisement.
- Pricing and taxation: depending on the government taxation and competition from the black market, a cannabis company can either be impacted positively or negatively.
With that being said it’s obvious you can’t run short of options when it comes to investing in marijuana. In case you feel we left something out or maybe you’d like to add a point or two to what we’ve already said, please don’t hesitate to share your thoughts in the comment section below.
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