It’s no secret that the business of legal weed is literally booming. Even though the marijuana mania that we saw when Colorado and Washington first made herb legal for recreational use is beginning to die down doesn’t mean that the industry has slowed in the slightest.
This means there’s money to be made in marijuana. A lot of money. And you don’t even have to be a “gangapreneuer” to get a piece of the pie. Investing in marijuana has a lot of people thinking green…cash and chronic included.
The Risks and the Rewards
Investing in marijuana, whether it’s a marijuana company or marijuana stocks, could offer a pretty nice return if all goes well and at the moment that's a pretty big if. Even though marijuana’s legal, it’s not yet legal at the federal level. At any time the federal government can pull the rug out from under the whole thing, leaving would-be investors empty handed.
Legally investing in marijuana comes with risks, but with risk also comes reward. With business already in the billions and estimates that the industry will be worth $15.2 billion by the year 2020, it seems like the right time to invest in cannabis is…now. Weighing the risks versus the rewards is ultimately up to you.
Where to Put Your Money
If you’re going to invest in any of the already established medical marijuana companies (which is ultimately the best idea) or drop some dough into some of the more popular publicly traded marijuana companies (yes, they exist), it’s obviously wise to know where to put your money.
The most recent market cap by marijuana industry sector (through April 2015) looks something like this:
Pharma/Research $1.5 billion
Producer $645 million
Consumer $302 million
Real Estate $216 million
Consulting $170 million
Tech $162 million
Industrials $54 million
There’s big money in many different sectors, with more than enough room to grow. Perhaps the biggest eye opener of just how much potential legally investing in marijuana holds came in the beginning of 2015 when PayPal co-founder Peter Theil put down some serious cash to participate in a $75 million funding round to help Privateer Holdings (the first US-based private equity fund for marijuana) expand.
Where will you decide to drop a dime? The best thing you can possibly do is stay informed. Watch the market. Look to see which cannabis companies are killing it and what ones are being phased out. In a market that is seriously changing every day, you run more opportunity to succeed in your investments if you know who’s doing what.
Marijuana Stocks
If the stock market’s your thing and you’re thinking that marijuana stocks could be your next big break, you might be on the right track. There are about 80 different stocks to choose from in marijuana right now, some of them legit and others totally shady.
AeroGrow International Inc. (AERO) and Zoned Properties Inc. (ZDPY) are both some of the more popular stocks for those that have become interested in investing in marijuana. GW Pharmaceuticals (GWPH) is another big player and is one that has been known as a market leader. Stocks have seen rises from $67 to the high $80s in this company, although it’s not constantly holding at these high numbers.
There are also a number of smaller stock options in many publicly traded marijuana companies, but in this emerging industry it’s hard to tell what’s really going to last. Keep in mind that this is brand new business and an extremely risky one at that.
According to Anthony Cataldo, accounting professor at Arizona State University who has kept a keen eye on the business of marijuana investments, marijuana stocks could reap high returns…until the next blow to all this legal pot business. If the federal government comes in and shuts this legal business down, trading in marijuana market may collapse.
Cataldo has studied this area of the market in detail and found that of the 60 publicly traded companies who were trading marijuana stock, only 21 of them had working capital. Numbers like these tell the truth while many scramble to become part of this burgeoning business. To invest or not to invest, that is the question.
It can go both ways. If things continue to boom (which we all hope is the case) investing in both retail and medical marijuana companies could just be your ticket to stacks of cannabis cash. If not, you better hope you’ve planned ahead. Your best bet is to proceed with caution until you know exactly where this rapidly changing industry is headed.
Disclaimer:
The professionals and companies described are not associated or affiliated with Cash Cow Cannabis, and they may not endorse Cash Cow Cannabis or the information provided. The names of other companies, products and services are the property of their respective owners.
Cow Cannabis is not a Registered Investment Advisor, Broker/Dealer, Financial Analyst, Financial Bank, Securities Broker or Financial Planner. The Information on the Site is provided for information purposes only. The Information is not intended to be and does not constitute financial advice or any other advice, is general in nature and not specific to you. Before using any information to make an investment decision, you should seek the advice of a qualified and registered securities professional and undertake your own due diligence.
Works Cited
http://www.investopedia.com/articles/investing/022715/2015-marijuana-stock-analysis.asp
http://www.bloomberg.com/graphics/2015-weed-index/
http://marijuanastocks.com/top-5-marijuana-stocks-watch-2015/
http://www.cnbc.com/2015/06/22
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