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How to Invest In Marijuana Stocks

How to Invest In Marijuana Stocks

Marijuana stocks are becoming increasingly popular as more states are legalizing the use of the drugs for medical and recreational purposes. Now you can even invest in marijuana stocks through a regular brokerage account. However, marijuana stocks can be risky as any other stock, although the market growth is encouraging. Indeed, stocks are often among the most dangerous investments, as companies can be very volatile. If you need help investing in marijuana stocks, we recommend working with a local financial advisor.


How to invest in marijuana stocks

The easiest way to buy publicly traded marijuana stocks is to open a brokerage account. Once you've determined how much you can invest, you're ready to sign up and fund your account. Additionally, if you are interested in exchange traded funds (ETFs) or stocks, you will have several investment options to choose from.

When choosing a broker to open an account, consider the features that are most important to you. For example, some brokers specialize in simplified online/mobile trading, while others offer comprehensive stock market tools that you can use for analysis. Here are some popular options to get you started:

Brokerage comparison

Brokerage Firm

Stock Trading Fees

Minimum

Best For

Robinhood

$0

$0

-Mobile/online traders

- Self-sufficient

Merrill Edge

$0

$0

-Bank of America account holders

             -Those who prioritize customer service.


Charles Schwab

$0

$0

-Sophisticated online traders

-New investors who can afford to pay for assistance


If you're new to investing or don't have a lot of time or energy to invest, a financial advisor can help. Advisors usually specialize in different types of investments, strategies, and markets, so try to find one that suits your needs. Also, research the different types of fees for financial advisers.

 

Overview of the Marijuana industry

Most businesses in the marijuana industry fall into one of three categories: producers/growers of marijuana, manufacturers of cannabis drugs, and suppliers of ancillary products/services. Below is an analysis of each of the major areas of the market:

Overview of the marijuana market

Marijuana Producers and Growers

- Marijuana cultivation

- Cannabis products

- Product distribution


Cannabis-Focused Drugs-Makers

- Pharmaceuticals

- Cannabis biotechnology companies


Ancillary products and services

- Support for marijuana growers

- Hydroponic products


The marijuana industry is growing rapidly, with more and more states legalizing the drug both medically and recreationally. Like any other booming industry, the marijuana market attracts many investors.

Marijuana products and marijuana stocks are divided into several categories. Although the product is now legal in many states, cannabis remains illegal at the federal level. This, therefore, represents a significant legal risk for investors.

However, there are a variety of companies to choose from when buying marijuana stocks. In fact, some of the most popular U.S. marijuana stocks listed on the Nasdaq include Tilray Inc. (TLRY), Cresco Labs Inc., Cronos Group Inc. (CRON), and Jushi Holdings Inc.


Types of Marijuana Products

Marijuana is generally divided into two different categories: medicinal and recreational. Although medical cannabis is legal in 36 states, Washington, DC, Guam, Puerto Rico, and the U.S. Virgin Islands, recreational use is only legally permitted in 19 states, D.C. and Guam.

Also, other types of cannabis products fall under the marijuana market. Some of the more common marijuana medications include cannabidiol (CBD) or tetrahydrocannabinol (THC).

Both CBD and THC are natural compounds commonly used to treat conditions such as chemotherapy-induced anorexia, nausea, or vomiting. Recreational marijuana, on the other hand, is typically ingested while smoking the cannabis plant or consuming edibles made from cannabis.


Risks of Investing in Marijuana Stocks

Because marijuana remains illegal in the United States, the market poses a significant risk to potential investors. This risk applies to those states that have not legalized the sale of marijuana and those states that have legalized it. This means that companies that currently grow and supply cannabis products are subject to possible federal intervention.

Investors should also recognize the risks associated with buying over-the-counter (OTC) marijuana stocks. U.S. corporations, such as the New York Stock Exchange and the Nasdaq, must meet certain conditions to remain members. This usually results in regular financial records and minimum shareholder size requirements. However, companies that offer over-the-counter marijuana inventory are not required to meet these requirements. Therefore, you should carefully consider factors such as the value of a company's market capitalization and total assets before buying stocks.

The industry also faces investment fraud and scam-facilitated schemes. SEC (Securities and Exchange Commission) has issued warnings to investors regarding market manipulation and fraud. Since the marijuana industry is still relatively new, you should consider these risks when considering your long-term savings goals.


Should You Invest In Marijuana Stocks?

Although the marijuana industry is an emerging market, it is advisable to thoroughly research before buying any stocks. You should also assess the risks associated with your investments and determine whether your current investments can withstand potentially volatile research. Also, be sure to carefully consider how your portfolio could be affected by an industry that still faces potential legal intervention.

A great first step in deciding to invest is to determine your risk tolerance. A financial advisor can help, but it involves choosing your financial goals and when you want to achieve them. This research will likely lead you to the best possible decision for your financial situation.


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