Marijuana Investing – Here’s what you need to know
By Sat, Apr 27, 2019
Savvy investors are always on the lookout for legitimate opportunities. Not just any investment will do, however. The smart, long-term investor looks for potential opportunities with staying power, the kind that can potentially earn profits not just now but for many years to come.
2017 was the year of the cryptocurrency. Digital currencies like Bitcoin and Ethereum became a sensation among investors and speculators. Bitcoin saw an astronomical price rise, climbing over several thousand percent in 2017 alone. So unless you were living under a rock last year… you know the marijuana industry saw a huge rise.
In fact, legal marijuana in North America was a $10.4 billion dollar industry in 2018. And guess what… it’s only going to continue to boom as more and more states legalize marijuana.
That’s right: pot. Marijuana, weed, reefer, cannabis-whatever you choose to call it. Cannabis is a psychoactive drug that has uses beyond just recreation. The compound may be used for medicinal purposes as well as for religious or spiritual purposes. Medical marijuana can be used to treat a variety of diseases and to ease symptoms of numerous conditions.
There are reports of the drug being helpful in reducing nausea and vomiting for chemotherapy patients, for it boosting the appetite of patients with HIV/AIDS and even for treating chronic pain. Although the evidence for efficacy in medicinal uses is fairly limited, additional studies will likely take place. In addition, the compound is likely to be studied for a variety of other conditions.
As marijuana becomes more widely used for medicinal purposes and more accepted by mainstream society as a legitimate treatment option, demand for legal marijuana could potentially rise substantially.
Since widespread legalization has taken place in 2018 or the years ahead, recreational demand could also see a significant boost. The states that have already legalized marijuana for recreational use include California, Nevada, Oregon, Washington, Colorado, Alaska, Maine, Michigan, Vermont, and Massachusetts. Pot is also legalized in other states for medicinal purposes including Arizona, New Mexico, Montana, North Dakota, Nebraska, Oklahoma, Arkansas, Missouri, Illinois, Florida, West Virginia, Pennsylvania, and New Jersey. More states could elect to follow suit, as marijuana sales can provide needed tax revenues. Legalization removes the stigma often associated with marijuana, and as it becomes legalized in additional jurisdictions demand could potentially go through the roof. That demand will have to be met by legitimate suppliers of cannabis-and that’s where opportunity may lie.
Numerous companies have already begun meeting demand, and such companies have tremendous growth potential. And these aren’t just itty bitty mom and pop operations. In fact, Constellation Brands (you know – the company that owns Corona beer and other labels) recently invested nearly $200 million dollars in a company called Canopy Growth Corp, purchasing an almost 10 percent stake in the company.
Other companies are also paying attention. Molson Coors Brewing Company-the maker of Coors beer is one of them. In a recent article from The Denver Business Journal, CEO Mark Hunter was asked about any marijuana plans the company may have. He was quoted as saying “Obviously, being based here in Colorado, we’re very familiar with cannabis, as it’s been legalized here. And clearly this is something that, as the whole legal landscape continues to change, we’re actively working to understand. We have a team of people working on that. We’re looking at potential impacts and/or the opportunities associated with and we’re developing a range of responses.”
You don’t have to be a multi-million or multi-billion dollar corporation to participate in what some have suggested is the fastest growing industry in the U.S. And you do not need to invest simply in pot-producing companies to try to take advantage of what could be one of the biggest investment opportunities of a lifetime.
In fact, there may be some easier ways to try to participate in the green rush… With the accelerating momentum of this rapidly growing industry, numerous opportunities exist that may potentially provide substantial upside with more favorable risk/reward profiles. You just have to think “outside the box.”
Consider this for a moment: As marijuana becomes more widely legalized and accepted, there are a number of arenas that stand to grow with it. Areas like:
- Research
- Marketing
- Transportation
- Security
- Distribution
- Payment Solutions
- Agricultural Technology
Then there’s also the companies that manufacture lighting for the plants, watering systems and even climate control. Companies in any of these areas could potentially see explosive, sustainable growth as this industry continues to gain steam.
And don’t forget about biotech and pharmaceutical companies. These corporations may use cannabis or related chemicals to produce new and exciting treatments for various conditions and diseases.
The possibilities are undeniably there, and now is the time to look at getting involved in this exciting industry.
Interested in a few places to start?
AbbVie Incorporated trades on the NYSE under the symbol ABBV. This pharmaceutical company has an FDA approved cannabis-based drug on the market called Marinol used to treat nausea and vomiting for chemotherapy patients and to help restore appetite for patients suffering from AIDS. The Scotts Miracle-Gro trades on the NYSE as well under the symbol SMG. While the company is best known for its lawn care products, it is developing products to assist cannabis growers, including a pesticide for use on marijuana plants. The U.S. recently saw the launch of the first marijuana ETF, traded in the NYSE under the symbol MJX. This exchange traded fund is designed to track companies likely to benefit from an increase in cannabis use.
But don’t go in flying blind. Although the marijuana industry may be the next “big thing,” there are no guarantees. In fact, there are also significant risks. You should do your homework regarding an investment in weed just as you would with any other type of investment. Carefully examine your investment options in the industry. Look to invest in companies with strong management teams, and a solid business plan. And be ready to buy and hold.
The marijuana industry could be at the very beginning stages of massive growth and exploding revenues, but solid, sustainable growth takes time. Investments made in the industry should, therefore, be made with a long-term horizon in mind. And of course, never put all of your eggs in one basket. As much as you make like weed, it should only be one component of a well-diversified portfolio!
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