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The legal marijuana industry is booming.
In 2018, the US sales hit almost $10 billion, which accounts for 90% of the global market. In the next few years, the annual growth of 21% will propel us to even new heights.
Customer base is expanding and new businesses sprouting up. On top of that, more states are approving recreational and medical consumption. It’s clear that momentum is with the industry and time to act right.
The marijuana investment opportunities are getting both more lucrative and diverse. Regular cannabis stocks are still the bread and butter, a staple strategy to gain exposure. But, there are also some innovative approaches to ponder.
Here are the best ways to build a green portfolio.
1. Cannabis Stocks
In Canada and the US, stocks of cannabis-related companies are traded publically on exchanges.
Apart from cannabis leaves, they produce CBD oils, hemp-derived food, vaping products, lotions, creams, edibles, etc.
Penny stocks are available via over-the-counter exchanges. On the other hand, one can purchase regular stocks via major exchanges (TSE, NYSE, NASDAQ, etc.).
The former are more numerous, but they are highly volatile and unpredictable. That’s because over-the-counter providers feature looser filing and disclosure requirements.
Hence, you want to stick to regular stocks. And don’t worry— the Cannabis Stock Index is recovering after some rough period. Just note there are fewer listing exist in the US because of regulatory uncertainty.
2. Dispensaries and Growers
Startup investment opportunities abound.
First off, small dispensaries are taking root across the country. Many small and medium business owners are rapidly entering this market domain. At the same time, investment in marijuana stocks of leading companies is on the roll.
There are a few things to keep an eye on here.
Depending on the jurisdiction, businesses are obliged to have a certain amount of working capital at hand. Your job is to investigate how much. Likewise, it’s crucial to check out their revenue streams.
It’s estimated regulated dispensaries gross $3 million per year on average.
Growers are another popular choice for investment. They cultivate marijuana (indoors or outdoors) and benefit from economies of scale. The only problem to be aware of is a higher risk of a federal crackdown.
3. Ancillary Companies
Nowadays, marijuana businesses operate across the entire supply chain.
Among other things, this means you can buy stocks of ancillary companies. They don’t touch the product but provide related products and services. Their operations can involve packaging, branding, consulting, software, and marketing.
Acting as niche middlemen, they are much less prone to legal risks (that stem from the federal status of the pot). Moreover, they can cross state borders without fear. These large, multi-state operators usually involve more investment security and diversification.
We didn’t even mention companies that produce vaporizers, energy solutions, fertilizers, irrigation lines, and hydroponics. The list goes on, so feel free to explore further.
4. Biotech Sector
The market is getting increasingly diverse and harbors some safe investment pockets.
For example, the biotech sector is poised to explode and is dotted with promising companies. They champion cannabinoid-based solutions for treating epilepsy, anxiety, insomnia, pain, and other conditions.
In other words, they develop prescription drugs from ingredients found in cannabis strains. The great thing is new cannabis therapies constantly pop up and trials for products evolve.
Thus, biotech is already one of the most reliable long-term investments you can make. The future for forward-thinking businesses looks nothing but bright.
5. Exchange-Traded Funds (ETFs)
Another tactic is to purchase shares of funds.
Namely, marijuana ETFs function the same as regular ETFs. They deal with diverse assets and track indexes on renowned exchanges such as NYSE.
Make no mistake: they have seen some impressive gains in assets and popularity as of lately.
Here, instead of handpicking single stocks, you purchase whole groups (bundles) of them. What you’re buying are fractions of ownership of businesses on respective ETFs.
Portfolio diversification is one of the main advantages of this novelty approach. Early birds have already hit it big. So, don’t wait too long to join the party.
6. Medical Cannabis
Research, production, evaluation, and distribution of medical marijuana is taking off.
Medical users spend more than recreational consumers. More than 30 states have already approved doctors prescribing marijuana. So, this sector offers considerable social utility and lucrative potential.
To avoid the potential pitfalls, however, you want to take precautions. Invest only in cannabinoid-based drug developers that have FDA approval. Support reputable medical clinics, as well as research, education, and development centers.
Businesses like Green Rush are an interesting investment opportunity as well. They run web-based operations and deliver varied medical products to a wide customer base.
Finally, you might want to focus on cannabis byproducts called CBDs. These specialty consumer products are winning over a growing army of vapers.
7. Cannabis Real Estate
The sector of real estate is one of the surprising safe havens for marijuana investment.
Take the example of an enterprise called Innovative Industrial Companies. It’s an innovative real estate investment trust, which is quickly expanding its footprint.
It provides capital and long-term leases for licensed medical marijuana companies. This is a big deal because these businesses often struggle to secure leases in the local markets.
There are other players that develop, own and rent specialized industrial and greenhouse facilities. Some of them even give you a chance to reap dividends. This is not common with regular small stocks.
The tricky thing though, is that industry is in its infancy. It’s still unclear who is who. Do your homework to alleviate this concern.
Marijuana Investment: A Bold Move
The green rush is in full swing.
Swarms of investors are flocking to what is already a multibillion-dollar industry. They have a growing range of options to add to portfolio too.
Alas, the hot cannabis landscape is also still very frail. Federal status of marijuana is a major obstacle on the road to financial glory. Then again, you can avoid plant-touching companies altogether.
Alternative marijuana investment strategies are gaining ground left and right. It pays off to think outside the box and tap into emerging opportunities.
When hunting for cannabis stocks, always do your market research. Thoroughly vet scouted companies to minimize the risks.
Start with baby steps and gradually improve your strategy. Check out our cannabis section for more green insights.
Stay ahead of the curve!