High risk, high reward.
It’s not the usual “high” you think of in regards to marijuana but savvy investors know that marijuana stocks provide a unique opportunity for creating wealth. As the laws regarding the use, manufacture, and sale of marijuana continue to ease worldwide, the opportunities for investing continue to multiply.
However, as much of the cannabis stock market is made up of small businesses, they are few and far between in listings on the major exchanges.
That’s not to say you can’t find large scale corporations with marijuana exposure on the big markets. You absolutely can, and they are worth looking at. Companies like Scott’s Miracle-Gro and Cree who produce equipment that marijuana growers use to produce and biopharma companies such as Insys Therapeutics and Valeant Pharmaceuticals who research and create cannabis derived drugs are all examples of pot stocks you can find on major indexes.
Options for investing in cannabis stocks
So what about other options that may have potential for greater return?
There are smaller indexes specializing in pot stocks such as the U.S. Marijuana Index, which began operating in January 2015. As with any new financial index there is a degree of volatility inherent in it that might make many investors nervous, however this is also a prime poaching ground for high risk, high return hunters.
The index is comprised of weed stocks that meet the following criteria:
- Minimum market capitalization of $30 million
- Daily trading volume of $600,000
- Stock price that is at least 10 cents
- Exemptions are made for companies that have over five million in annual revenue
(At the time of writing there are 18 companies listed in this index.)
Another option is cannabis related exchange traded funds or ETFs. Canada launched it’s first pot ETF recently–Horizons Medical Marijuana Life Sciences ETF, which trades on the Toronto Stock Exchange.
Similarly, ETF Managers Tryst filed with the SEC to launch an ETF called the Emerging AgroSphere. This ETF tracks the performance of exchange-listed common stock or corresponding ADR or GDR of companies working with legal medical research to produce government approved prescription drugs using natural or synthetic marijuana derivatives, legal hemp products, or involved in the supply chain of said categories.
Why is now the time for pot stocks?
With the sea change in policy and public perception currently transforming the marijuana industry, getting in on the ground floor, as it were, is easier than it will ever be.
Consider that even under the laws previously governing cannabis in the U.S., it was still the number one cash crop.
That hasn’t changed.
Cannabis is more valuable than coffee ever was and wise investors who got in early on the coffee craze made huge fortunes. Cannabis is here to stay, it’s not just some trend that will blow away with a light breeze and the companies that produce marijuana, derivatives, and production equipment are all seeing real growth.
But, don’t just take our word for it.
Consider that huge corporations such as Constellation Brands, Anheuser-Busch, and R.J. Reynolds are exploring ways to capitalize on the future growth of marijuana industry. Though there are still risks, the catalyst for massive potential exists and opportunity waits for no one. With California just recently allowing recreational use and several states posed to do the same this year, as well as the entire country of Canada set to do the same this year the future is now.
Cannabis stocks are set to light up and blaze a trail to massive wealth potential. Don’t get left out of the circle. Do your homework, choose a broker, and get started now with marijuana stocks while the growth potential is high.