How to Invest in Marijuana: An Investor's Guide

Cultivation of hemp is not only an interesting hobby. While the sale of cannabis was once prosecuted under the Law, it is now becoming legal in many countries. For example, in Canada, Germany, France, Italy and England, purchasing medical marijuana is as easy as buy a bong in Ukraine.

Next, we will tell you how to make money on cannabis, and what risks it entails. This will help novice investors avoid common mistakes, and not only save, but also increase their investments.

Distinguish the types of marijuana

From an investment point of view, it is important to understand that cannabis is divided into medical and recreational cannabis in terms of application. They have different investment prospects.

Medical cannabis is marijuana that is prescribed to patients with depression, pain and other health problems. Now almost 60 countries have legalized this variety of cannabis. In the US, it is legalized in 33 states.

Recreational marijuanais an adult product that can be taken without a medical prescription. It was legalized by 6 countries of the world and 11 US states.

The market for medical cannabis is wider than for recreational cannabis, but people can only get this cannabis by prescription.

Research the categories of companies in the marijuana industry

For a novice investor, it is necessary to collect as much information as possible not only about the investment instrument, but also about the market segment itself, especially in the marijuana industry. There are three categories that most of the organizations whose activities are related to hemp fall into:

1. Producers and traders of cannabis. This category includes organizations that grow, sell marijuana, or a combination of these activities. They distribute medical or recreational cannabis.
2. Biotechnology companies. Biotech firms produce drugs that contain cannabinoids.
3. Providers of additional services and products. Marijuana is indirectly associated with firms that manufacture products for cannabis growers.

For example, they can be manufacturers of hydroponics or lighting systems.

Based on the analysis of the information received and in order to manage risks, the choice of category will narrow down the search for an investment tool.

Be aware of legal risks in the marijuana market

Although medical cannabis is legal in many major countries, cannabis is still a long way from full legalization. Much will depend on the US. The sale of marijuana is now illegal at the federal level, but is legal in some states. Because of this, investing in cannabis can be risky.

If cannabis is fully legalized, companies in the marijuana industry will grow rapidly and bring great returns to investors. But everything can be vice versa. If the sale of cannabis is banned, the investment will most likely be lost.

It is important to remember where cannabis can be used now. Medical marijuana is a safer investment because the risk of being banned is much less than recreational marijuana.

Get ready to invest

Research the activities of companies in which you want to invest. It is useful to know aspects of its work:

• growth strategy and financial position;
• composition of the team at the head of the company;
• performance compared to the competition.

Now investing in cannabis is considered a niche investment. Experts recommend keeping no more than 5% of the total investment portfolio in them. This will reduce the likelihood of major losses.

Estimate stocks of large companies

There are large-cap firms in the marijuana market. Here are some examples:

• Canopy Growth Corporation

The largest producer of medical cannabis in Canada.

• Cronos Group

Sells cannabis not only in Canada, but also in the USA. 45% of the shares of this company belong to the Altria tobacco company, which also owns the Marlboro brand.

• Green Thumb Industries

This is a major supplier of quality marijuana in the United States.

Compared to small manufacturers, these companies have already occupied a large market share. Therefore, they can be invested in with less risk.