The trend of Cannabis legalization isn’t as recent as many people think. The first state to legalize Cannabis in the United States was California back in 1996. It’s important to note that this drug was legalized for “medical purposes,” meaning that people may only research and use them as medicine and other healing purposes.
Canada is another country which has recently legalized Cannabis. The main difference is that Canada issued a nationwide legalization process for cultivation, acquisition, possession, and consumption of this drug in the area; this means that Cannabis can be acquired in every state of the nation, as long as it’s compliant with the federal Cannabis Act, which came into effect in October of 2018.
As of today, Cannabis is legal in many states of the U.S. While most states allow the use of Cannabis for medical reasons only, there are a few states in which they’re allowed as a recreational and medicinal drug, such as Arizona, California, Washington, Oregon, and others.
Considering the amount of growth of popularity that Cannabis has had over the past years, many financial experts claim that it’s a matter of time until it’s legalized worldwide. Many investors around the world have been thoroughly investigating the Cannabis markets to find financial opportunities there, and most of them conclude that one of the best times to invest in the Cannabis market is today.
While this asset is expected to keep growing, it can be a greater opportunity to invest in it while still in this state. Right now, not many people have taken the time to read about the potential of Cannabis in stocks since they believe it’s an unreliable asset. However, the same thing happened with Bitcoin, and right now, it’s one of the most popular assets in the world.
The term “Cannabis” is used to refer to three plants that provide psychoactive properties to the consumer; these three plants are the Cannabis indica, Cannabis ruderalis, and Cannabis sativa. When any of these plants are harvested and dried, the user ends up with a drug portion.
This drug has been called many different names over the years, but the most popular one is “Marijuana.” Cannabis (or marijuana) is mainly used as a relaxing and healing medicine; some people prescribe this drug to treat some chronic conditions, such as chronic body pain. On the other hand, it’s also used to treat anxiety and stress.
The two most popular components (or cannabinoids) of Cannabis are cannabidiol (CBD) and tetrahydrocannabinol (THC). Both components have psychoactive properties, but CBD is considered non-euphoric and non-intoxicating, which means that it doesn’t get you the “high” effect. The component responsible for causing that effect is THC.
Currently, there are several products that contain one of the two components (Although there are some that include both cannabinoids). You can find Cannabis in products such as edibles, oil, skincare, beverages, and more.
However, it has been proven that Cannabis doesn’t have that many risks (As long as it’s consumed in a responsible manner). Cannabis is currently seen as a natural, safe substance that can be consumed safely for medicinal or recreational purposes.
Overall, this drug is considered less likely to develop drug independence in the consumer than other substances, which is why many people are looking up to its full legalization in the future. Additionally, many researchers are coming up with optimized ways of delivering the healing effects of Cannabis without risking the consumer’s health.
Thanks to these findings, more companies are willing to invest in Cannabis since it’s getting more usage freedom across the world; this has caused several investors to start trading stocks and bet on particular companies who are investigating, cultivating, or producing Cannabis-based products.
The Cannabis industry is divided into two main groups, medical Cannabis and recreational Cannabis. Medical Cannabis industries refer to companies that mainly work to research and develop Cannabis-related products to treat health conditions. On the other hand, the recreational Cannabis industry refers to companies that research Cannabis as a recreational drug, without focusing on any medical benefits.
While the two markets are slightly different, both of them represent a great financial opportunity for investors around the world. It’s important to note that the recreational Cannabis market has a slightly higher investment opportunity rate, but it’s highly taxed.
Some companies involved in the medical Cannabis industry are Tilray, Corbus Pharmaceuticals, GW Pharmaceuticals, and Zynerba Pharmaceuticals. In order to make a good investment in this market, you need to focus on how the company is working with the drug.
On the other hand, you can find companies such as Canada’s Canopy Growth, which is one of the most important ones on the market right now. In 2020, this company reported a total revenue of $398.77 million, which is a huge increase from the previous year’s $226.34 million in revenue.
Overall, the main financial difference between the two is that the recreational industry has to go through heavy taxes, whereas the medicinal industry doesn’t. Some investors aren’t fully convinced about investing in this asset since it’s still federally illegal in the U.S. However, this is slowly changing for the better.
Aside from the two types of products, there are three types of stocks, which you should consider at the time of investing:
There are three main reasons why today is one of the best times to invest in this industry, and we’re going to break them down for you so that you have a clearer idea on what’s in store:
Thanks to the recent trend of legalizing Cannabis around the world, many financial experts are claiming that the industry is going to grow to outstanding numbers in the following decade. Additionally, both medicinal and recreational Cannabis is equally popular among investors, making it a fairly flexible asset.
According to the Grand View Research, the Cannabis market is expected to reach $73.6 billion in revenue by the year 2027; this means that the Cannabis industry has both short-term and long-term opportunities for investors. While the long-term results may not be as clear today, they’re looking promising.
As Cannabis gets legalized in more areas around the world, trading them from one market to another is getting easier since companies can get on public listings to trade the asset, which increases the revenue. It’s important to note that these revenue numbers come mostly from medicinal Cannabis since recreational Cannabis is still illegal on a federal level. However, it’s expected for the governments to ease the restrictions as time passes.
In places where Cannabis is fully legal on a recreational and medicinal level, the demand is huge. Regardless of past year’s events in the U.S. and the world, Cannabis sales are still growing steadily.
According to sales data in Colorado, its Cannabis market has recently surpassed $200 million in revenue, which paints a bright future for this asset. As the trend states, places where Cannabis is legal can expect a big increase in demand and revenue over the following years.
In conclusion, you have a big financial opportunity of investing in Cannabis stocks today and learn everything about them. However, you need to do proper research about how the market you’re interested in behaves if you want to make a good decision.
If you want to go in as safely as possible, focus on companies that are positioned as strong options among the competition; this way, you ensure a better long-term financial opportunity.
If you want to start more easily and intuitively, it’s suggested to go with CFDs since they allow you to make small investments without being exposed to such big risks right away.
CFD stands for “Contracts for Difference,” and it works as a financial tool in which you can speculate on the price of an asset without having to buying or selling it. A great thing about CFDs is that you can speculate in any direction; whether it’s a price increase or drop, you can make a trade based on what you think is the best choice.
In the case of the Cannabis market, you don’t have to purchase the asset to start trading it. Instead, you can invest in a “Contract for Difference” and speculate on the asset’s future value. For example, if you’re investing in the GW Pharmaceuticals company, you can purchase a CFD if you believe that the company’s shares are going to go up or down at a particular point in time.
This financial instrument has proven to be a much more reliable option for home-investors than shares, so if you’re starting in the trading world, we suggest that you go for CFDs.
Keep in mind that this process is not as straightforward as it seems; if you want to become an experienced investor that makes educated financial decisions, you need to cover as much information as possible on what you’re interested in.
After you’ve decided which company you’re going to invest in, you need to keep an eye out for external factors that can influence your trades, such as these ones:
Cannabis is still in the process of getting legalized worldwide. While there are many states in which it’s already legal, there are some others in which it isn’t. Additionally, it’s important to remember that Cannabis is still federally illegal in the United States. You need to make sure that you research the legal risks that may affect the company you decided to invest in before making any trades.
As mentioned before, there’s an increasing demand for Cannabis in places where it’s fully legal. However, you should note that some companies don’t have enough supply for that kind of demand, which results in price decreases. Take a look at the company’s current supply/demand rate to verify that everything is good to go.
Some companies are constantly running through the risk of running out of money, which labels them as unprofitable for investors in the Cannabis market. Getting the capital necessary to fund a company’s growth can be complicated, so that’s a factor that you may want to consider before choosing a company.
Overall, you need to take a look at the following criteria before choosing a company to invest in:
The most important piece of advice that we can give you is to invest carefully. Trading can be a highly speculative activity with unexpected turns and risks. Considering the consistent growth of the Cannabis industry, it’s expected to come with high levels of risks.
One of the best ways to tackle this is to start small and keep increasing your investment as you learn more about how it works. If you assess all your potential risks and regularly keep an eye out for your investment, you’re likely to become a great trader.
We understand how complex the Cannabis industry can be, which is why we’ve attached a FAQ section below with some general definitions that most people ask our team on a regular basis.
As long as you take your time to investigate, assess your risks, and make decisions with a clear head, your trading journey can be smooth from start to end. However, it’s important to note that you may still run into some unexpected risks from time to time due to the asset’s volatility.
Yes! While having knowledge beforehand can be helpful, you can start with the basics and keep learning from there with each trading session.
There’s no specific amount as to how money you should invest in the Cannabis stocks. You can make this decision based on what your goals are, the company you’re planning to invest in, and your current budget.
As we mentioned before, this is an amazing time to start investing in Cannabis stocks. Regardless of your current experience with financials or Cannabis, this is a one-of-a-kind chance that you should make the most of.
If you want to learn more about this world and start your journey, join our community now!