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2 Things you must know to invest in cannabis stocks
Before you trade stocks, there are some things you need to know. This article should guide you.
What business are they in?
Some cannabis companies will deal in either medical or recreational marijuana. Right now, the producers whether large or small in Canada are into medical-cannabis only. A lot of the companies that make money from marijuana do not care about the recreational market. Some like GW Pharmaceuticalshave built a reputation of being more of a drug company than a recreational-cannabis producer.
When you want to invest in cannabis stock, you should be sure the company you choose is concentrated on Cannabis, and not something else.
How much cannabis are they growing and at what cost?
Another thing you must know or check before investing in marijuana stock is the amount of cannabis they are growing and at what cost.
In Canada for instance, every cannabis company states its quarterly financial statements of how much pot it has grown and sold. These statistics are very important because they show how much the company can sell and grow.
Investors in the marijuana stock sector should be able to know how much the production of each product costs, and how much it is sold, like in every business. Some marijuana companies use the cost-per-gram metric, which is not a very clear way of disclosing statistics. Others do not disclose at all, while some break their stats down to cash cost-per-gram.
Before investing in marijuana stock, you should decide which company suits you, compare their quarterly changes, know how much input and effort a company is putting in their production, and carefully select from them. Doing this would ensure that you stay on the safe route when you trade marijuana stock.