If you’ve heard about the large gains cannabis stocks have generated since being legalized in several states, you can’t help but wonder if you too should be investing in cannabis too. Currently, medical marijuana is legal in more than 30 states, and recreational marijuana is legal in nine. When the drug becomes legal in all 50 states as well as the federal level, the demand will be more than ever. But when it comes to investing, you can’t wait until that happens — you have to get in now. Here’s why.
It’s All About Timing
If you’ve ever regretted not investing in a company when its stock was hot, you know that getting in early is key to getting rich. More and more companies in the cannabis industry have decided to go public and sell shares of their business in order to raise money for additional growth. And many investors have already bought shares of various cannabis stocks hoping for a big return. But not all stocks are created equal, and we’re already learning from some of their failures.
Nonetheless, if you want to take advantage of their mistakes and make money from the cannabis companies that are proving their place in the market, now’s the time to get started — while the price is still low.
It Could Get Big, Real Big
Predictions for how big the cannabis industry could become are astonishing. Industry experts believe that the U.S. cannabis market is poised for the most rapid transformation of any industry, reaching $22 billion by 2022.
A look at Canada’s and Germany’s markets make the U.S. market look even more promising. Canada’s marijuana sales, for example, are expected to yield a compound annual growth rate of over 55 percent. And Germany’s market is the fastest growing marijuana market in the world, expected to increase from only $9 million when it legalized medical marijuana in 2017 to $1.6 billion by 2022. What’s more, the U.S. market is expected to top both Germany and Canada, accounting for close to 75 percent of total cannabis revenue by 2022.
So does that mean that now is a good time for cannabis investors? Yes, if you do the following:
- Do your due diligence. Cannabis companies are new to the stock market and haven’t had time to build a trustworthy reputation. Look at their leaders and past successes before investing in any fund or company.
- Make sure the company you invest in is in compliance with both federal and local regulations. This can get confusing as states have different legal framework regarding what they’re allowed to sell.
- Be aware of the risk factors – Every state’s market is different and changing dramatically. Buckle up for a bit of volatility at first as cannabis finds its way in the economy.
- As the cannabis market becomes more regulated, it could have rapid evaluation shifts. Don’t get jumpy. Expect volatility at first and look at the long-term potential of the company you invest in.
Overall, it is important to remember that the reasons to invest in cannabis stocks outweigh any reason not to. Ask yourself the same questions about cannabis stocks as you’d ask about any other stock. For example, does their management team have a good track record? Are they responsible and ethical? Are they in a good position to grow? With a little due diligence, you could end up with an equitable stock portfolio thanks to the growing cannabis market. Sign up here for investor information and exclusive updates. It asks you to enter your phone number, but a little insider info – you can skip that part.
Happy investing!
