In the United States, 30 states have already legalized the use of medical pot while nine other states including the District of Columbia voted to legalize recreational use. With these developments, is it practical to invest in US cannabis?
The Canada Experience
Canadian Prime Minister Justin Trudeau announced recreational marijuana sales will become lawful beginning October 17, 2018. Once this happens. Canada emerges as the first nation to decriminalize recreational use. For the meantime other economies have started to relax laws allowing the use of medical cannabis. Even then, Canadian-based medical weed firms paced profits in global cannabis stocks starting in 2016.
Aurora Cannabis [ACB], a licensed producer of cannabis and among the leading Canadian medical marijuana firms, started selling weed in January 2016. It used to be one of the fastest-growing marijuana stocks during that year with shares reaching more than 380 percent.
It was only this year Canada’s top companies encountered rough sailing. The country’s Cannabis LP Index declined 12.7 percent from the current calendar year up to the present. This happened despite a sudden rise in January to all-time peaks. Since the highest point on January 9, the index dropped 39 percent. Prices increased 83 percent since October of 2017. This was the time Constellation Brands declared publicly it invested in Canopy Growth. At present, there are 29 publicly-traded marijuana producers in Canada.
Investment Options in the US Market
Let’s now focus on investing in the United States. What are the opportunities for those who wish to invest in US cannabis? Is it a profitable option? The fact is investment opportunities increase as acceptance of weed grows.
According to Market Watch, US-listed stocks of Canopy Growth Corporation soared more than 30 percent in August (2018). This came about after American liquor company Constellation Brands revealed its plan to invest around CAD$5 billion (US$4 billion) in the diversified Canadian cannabis firm.
Prospective investors have two choices if they want to put money in American or Canadian weed companies. The first is penny stocks on OTC exchanges. The second is regular stocks on legitimate and reputable exchanges like the New York Stock Exchange (NYSE), Toronto Stock Exchange, or NASDAQ. They can buy shares through web-based brokerages like TD Ameritrade and Fidelity Investments. Both operate from the USA.
Penny stocks are cheap but unstable and risky. Liquidity can cause sudden swings in the market. Moreover, penny shares don’t have the same reporting prerequisites. Unsuspecting investors can fall victims to the illegal practice of convincing business persons to purchase shares from a company to falsely inflate prices. Consult industry experts before finally deciding to invest.
Do your Research
Marijuana promises an ideal investment opportunity. However, it pays to conduct a detailed research first on the companies, market trends, and assess the chances before making the first move. Keep track of what’s happening legislation-wise. Never forget the basic rule, “Treat cannabis investing like edibles: Start low and go slow.” This would be the practical approach if you choose to invest in US cannabis.
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