Weed has long been thought of as an illegal substance primarily used by young adults to have fun. But the cannabis plant—where weed products come from—has become the center of other health and wellness research. It has also been legalized for medicinal and/or recreational use in several US states. If you’re interested in making money in this industry, now is the time to start investing in the Green Rush.
There is a lot of talk about the new marijuana economy, or the Green Rush. While it’s not yet federally legal, it’s likely to be in the coming years. When that happens, you’ll be happy you made an early investment in the cannabis business.
Before you get started, you should know a few things about marijuana investing.
Track Companies On Major Exchanges
Before you start investing, you need to know where to put your money. Even though the legal marijuana economy is less crowded with roadblocks, there are still limited listings on major stock exchanges.
It’s better to stick to stocks on exchanges like the NYSE and NASDAQ, but you can buy from other international exchanges like the Toronto Stock Exchange. Avoid the lower over-the-counter exchanges because these exchanges tend to be less transparent about the companies listed.
If you were to invest in cannabis stocks, here are a few listed on major exchanges:
- Aphria Inc (NYSE:APHA)
- Aurora Cannabis Inc (TSX:ACB, NYSE:ACB)
- Hexo Corporation (TSX:HEXO, NYSE:HEXO)
- GW Pharmaceuticals PLC (NASDAQ:GWPH)
You’ll want to know what each company’s market cap is, how their cash flow statements are looking, and how their shares are moving up or down in the market.
If you’re super new to investing in stocks, we recommend picking up a copy of Stock Investing For Dummies to learn the basics.
Follow Supply And Demand Trends
While you are investing in the Green Rush, you need to closely follow supply and demand trends. Currently, there is a high demand for weed and not as much of a supply—at least, not legally.
However, as recreational and medicinal cannabis is technically a commodity, and there’s always risk that the supply could oversaturate the market. Canada has faced this problem at times. Plus, local and federal laws sometimes tamper with the supply and demand flow of marijuana, creating uneven production results.
Invest Directly and Indirectly
There can be several issues with buying stocks directly from marijuana producers and distributors. Sometimes, marijuana producers also aren’t able to procure bank loans and have to turn to alternative financing. Also, market fluctuations can be sudden and drastic.
For these reasons, you should consider investing indirectly in the industry also. Buy stocks in companies related to marijuana production, but who aren’t themselves producers. For example, Scotts Miracle-Gro Company (NYSE: SMG) produces fertilizers and growth products that weed producers use. Another REIT that’s involved in the cannabis industry is Innovative Industrial Properties (NYSE: IIPR), a company that owns marijuana production facility properties all across the world.
There are many options to invest in marijuana indirectly through companies like these.
The marijuana economy is growing, but the lack of support from some major financial institutions still makes it very volatile. As you get started with investing in the Green Rush, you need to do substantial research first.