The marijuana industry is one of the most lucrative markets in the world. However, its potential has not been fully unlocked owing to the legal status of cannabis in many nations. Nevertheless, cannabis continues to attract global attention as scientific evidence has established its potential benefits in alleviating chronic symptoms.
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Due to the perceived medical importance of weed, many nations, including the US, have made significant steps to decriminalize and legalize its usage. In the US, about 16 states have already passed laws to legalize cannabis for recreational use. In contrast, over 30 states have also legalized and decriminalized cannabis for medical use.
The perception of weed among people has changed as recent polls indicate that many US residents support the legalization of cannabis. In addition, legislators in the US are also drafting bills to declassify cannabis from the Schedule 1 category. Schedule 1 contains products deemed harmful to the body, have no medical benefit, and no safety for their use. With the narrative about cannabis changing and becoming more acceptable, many investors consider investing in legal weed.
If legalized by federal law, the marijuana industry is projected to grow exponentially in the US. As an intelligent investor considering to venture into this industry, you need to know how to invest in marijuana wisely. Like any other business, the marijuana industry has numerous risks, creating massive losses if wrong investment decisions are made.
Do you consider getting into the cannabis industry? Here are some key things to note before investing in legal weed.
1.Understand the limitation of operating in various markets
You should know that in the US, marijuana is still illegal under federal law. However, in most US states, marijuana is legalized or decriminalized either for medical use, recreational use, or both. An intelligent investor should make an informed decision on the market to give them the maximum benefits before investing in legal weed.
Medical marijuana companies deal with the consumption of marijuana for its therapeutic benefits, such as the alleviation of chronic pain, anxiety, and depression. Marijuana contains two main compounds, THC and CBD, useful for treatment. The medical marijuana market is experiencing growth as numerous people keep investing in CBD oil, making the demand for CBD products rise significantly.
You need to determine the appropriate company for consideration when investing in legal weed and whether it operates in a single market or multiple markets.
2. You should know that marijuana needs third-party testing before reaching the market
It is a legal requirement for all marijuana products to undergo a safety test in a third-party lab and pass the set standards before becoming approved for sale in dispensaries and other cannabis outlets. Therefore, as you consider investing in legal weed, ensure that you have access to a third-party lab for fast testing procedures to avoid delays that can bring huge losses.
3. The cannabis industry does not enjoy the services of the banking sector in the US
Since cannabis is still a Schedule 1 product under federal law, many banking facilities shun operations related to cannabis companies. In addition, banks and other financial institutions are obligated to report to the federal government through the Federal Deposit Insurance Corporation. Therefore, this is an essential factor to consider before investing in legal weed as banking transactions ease the volume of transactions and enhance security.
With limited access to banking services, many cannabis investors suffer since they trade in cash, limiting their fast growth opportunities. However, if the legislators pass the SAFE Banking bill, the financial institutions will offer services without fear.
Do you meet qualifying conditions for medical marijuana in your state? Click the button below to get your medical marijuana card.
4. Before investing in legal weed stocks, evaluate what the company does
One of the most disturbing questions that linger in every investor’s mind is, ‘should I invest in marijuana stocks or not?’ Recently, marijuana stock companies have sprung up as nations continue legalizing the use of cannabis.
With the growing demand for cannabis, you can easily make wrong investment decisions that can come to haunt you or make you lose a hefty sum of investment money. You should know that generally, three types of cannabis companies exist, namely;
- Cannabis bio-techs: These are companies that make prescription drugs using cannabis.
- Cannabis growers and retailers: These are companies that cultivate weed. The weed is then sold to companies or individuals after harvest.
- Ancillary products and services providers: These companies support the marijuana industry by providing vital products and services.
As an intelligent investor, you should examine the company you aspire to invest in to determine its target markets, management team, goals, and vision, among other things. These criteria will help you to make informed choices before committing your money.
5. You should understand the different types of risks to encounter
Investing in stock is usually associated with some form of risk. However, investing in legal weed presents a unique set of risks that you need to know. Some of these include the following;
- Supply and Demand risk: As marijuana continues to get legalized and accepted in the mainstream markets, invariably, the number of companies involved in the production of this plant is increasing.
The cannabis industry is growing at an alarming rate, and soon supply may exceed demand which may cause a change in the stock prices.
- Political and legal uncertainties: Despite medical cannabis and recreational cannabis being accepted and legalized in numerous states, federal law still classifies it as an illegal substance.
Although progress is being made to legalize marijuana at the federal level, it is still uncertain when exactly this will happen. The uncertainty carries an inherent risk factor.
6. Understand the high risk of trading over the counter stocks
Over-the-counter stocks have the highest risk when engaging in the cannabis stock trade. These stocks are also called penny stocks. The law does not require companies trading penny stocks to maintain audited files with the authorities.
Investing in marijuana penny stocks may make you lose your investment because stocks usually have low prices. Additionally, many companies make exaggerated claims, making it easy for insiders to manipulate the stock prices.
Over-the-counter stocks do not also require companies to have some minimum market caps. So if you still consider investing in legal weed through investing in penny stocks, be vigilant to avoid the pitfalls.
7. Due diligence
If you want to succeed in marijuana stocks, you need to make informed investment decisions before investing in legal weed. Whether you are new or a veteran in the cannabis industry, you need to do some due diligence to make fortunes in this highly volatile industry.
Some of the precautions you can take to minimize the risk of loss may include:
- Invest by starting small and progressively increasing the shares you purchase
- Invest in the safest stocks
Also, please do some research to establish the company’s history you plan to invest in, its growth strategy, management, and stock prices.
Get medical marijuana legally from dispensaries. Click the button below to get your medical marijuana card.
The Bottom Line
At MD Berry, we have seen the efficacy of using marijuana to treat patients with chronic conditions. As a result, we have an approved cannabis center to provide specialized care for patients with chronic conditions. In addition, our qualified and licensed professionals offer personalized care for patients with drug addiction problems and other health complications.
Contact us today if you need a medical marijuana card. You can visit our facilities for fast and efficient registration. Alternatively, you can access the services by having a virtual appointment, and you will soon have your marijuana card.