Is Investing in Cannabis A Good Idea?
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Most investors focus on building a portfolio that includes government bonds, real estate, and publicly traded company stocks. Once in a while, investors look to diversify their holdings into other financial instruments or specific industries and niches. Is this the right time to be focused on the cannabis industry? And if so, is it investment worthy?
The cannabis market is booming, and it is no secret. Even though many countries still consider it illegal while others who have legalized it are struggling to make it broadly available in high quality and at a reasonable price, the leading cannabis stocks in the market have flourished. This rapid growth only means that investors all around the globe are taking advantage of the old, but new industry.
Why Should You Invest in Marijuana Stocks?
Cannabis is popular around the world as one of the most potent mind-altering substances. Many people who enjoy it for recreational and medical purposes. Evidence shows that the practice of using cannabis dated back to over 5,000 years ago and even the medical use of cannabis can be traced to 400 B.C.!
There are tens of millions of adults who use recreational and medical cannabis on a daily basis. The New Frontier Data says that there are about 38 million adults who consume cannabis at least once in a year, and 60% of that them uses the substance every week.
There are millions of people all over the world who consume cannabis because their doctors prescribed it, other use it illegally and many now use Cannabinoids (CBD) which is derived from the cannabis plant and contains little to no psychedelics. CBD can be purchased relatively simply online or in stores in North America and other countries.
The rise in the consumption of cannabis offers strong support for investing in businesses in this industry. But there are other reasons:
1. Liberalizing Attitudes
People around the world, especially in Western countries where cannabis was heavily attacked, have become more favorable for the use of cannabis in the late 20th century. This positive attitude towards the use of marijuana, CBD and other cannabis based products, whether recreational or medical, has dramatically grown over time.
As a matter of fact, in a Pew survey conducted last November 2019, there are 67% of American who are in favor of legalizing marijuana. The results only show how open are the citizens to the use of cannabis. Furthermore, 81% of the people opposed the so-called “war on drugs”.
2. Ripple Effects of Legalization
The destigmatization of cannabis has been successful, thanks to the widespread legalization in major states and in countries like Canada. This is a great indicator for future growth and adoption and a clear sign for cannabis stocks to appreciate.
A study published in JAMA Psychology in late 2019, stated that legalization directly contributes to increased cannabis consumption both for chronic users and from new comers to the space.
3. An Expected End to Federal Prohibition
As more and more states and countries are voting on the legalization of cannabis, this will open up for more business to support the industry. We are already seeing cannabis being infused in many foods, some credit card processors open to working with dispensaries and online retailers and some companies creating services tailored to the industry.
Analysts state that they expect the United States to eventually fully legalize marijuana. According to Marijuana Moment, there would be a 70% chance that marijuana would be legalized by the United States’ federal government, which would affect all the states. This would greatly attract investors in the United States, not to mention to propel the marijuana industry to greater heights.
4. Growing International Acceptance
North America stands at the forefront of the collective action fighting for the decriminalization or the outright legalization of marijuana. In Canada and the growing number of the U.S. states where recreational cannabis is legal, there are also 100 million adults in North America who use cannabis without the fear of reprisal. Outside of North America, the recreational use of marijuana is legal only in Uruguay and South Africa.
But you have nothing to worry about because the acceptance is also growing throughout the Western part of the world and in many developing countries as well. However, the progress is not uniform; you must also take note that the Philippines’ government-sanctioned vigilantism targets low-level drug dealers and consumers. This can only mean that the use of cannabis without the fear of reprisal is near impossible in the country.
Despite this, the long-term global outlook for cannabis decriminalization is still quite bright in most places in the world.
How to Invest in Cannabis
There are always multiple ways to invest in a specific industry. Here are some ideas to get into the cannabis space:
Look for large public companies that are well poised to grow as the industry becomes more mature. These can be growers and producers, testing facilities, distribution businesses, software and many more types of companies. Look for businesses with large footprints that can distinguish themselves and best server their clients
Invest in Private Companies
Investing in smaller private companies that are also well positioned to grow and eventually go public or be sold to larger public companies. You can do this as an angel investor, as a partner or even working in exchange for equity.
Start a Cannabis Business
Find a underserved part of the market and create your own company that can take advantage of the rise of cannabis. There are hundreds of opportunities that exist within the industry from starting a retail dispensary, warehousing, dropshipping site, mail order marijuana business, software, education business, testing facility, newspaper or magazine, delivery service, marketing agency, business broker and really anything you can creatively come up with
Buy Real Estate or Land
As demand will skyrocket, more and more need for grow and storing will be required. Many businesses are acquiring large real estate structures or turn them into growing facilities. In locations with warm climate conducive to growing, land can be a great way to grow this magical crop and cash in on the cannabis action.
If you are interested in the industry and want to invest in the space, this is a great time. The industry is constantly reaching new heights and it’s just getting started. However, just like any other investment, you must conduct more extensive research first. Each country, states, city, jurisdiction has different requirements and potentially licensing obligations. There are lawyers, accountants, marketers and business consultants that now specialize in cannabis that can help ensure you take the right first steps. If the cannabis market becomes successful in the coming years, you might be reaching heights for yourself!
Note: Comments in this articles are the opinion of PassiveCashSystems and may be incorrect and misleading. It is important that everyone review business and investing opportunities independently and properly research all the facts.