It’s no accident that investment in the legal marijuana market is referred to as the “green rush.” Many analysts are anticipating enormous growth for the cannabis business. By 2030, legal cannabis sales in the US are expected to surpass $57 billion, according to New Frontier, a cannabis research company based in Washington, DC.
To invest in marijuana, just like any other stock, you’ll need a broker. You’ll also want to complete your due diligence before choosing investments, which means spending the time to examine each company and remaining up to date with the current legislation.
Individual stocks and marijuana ETFs are the two primary forms of marijuana investments. You can diversify your investment across businesses in the whole marijuana market using ETFs.
Individual stocks may be the best option for traders trying to profit from brief price changes, according to Polcari. Otherwise, he favors ETFs because you don’t have to choose carefully or run the risk of picking the wrong firm with them.
While some ETFs are actively managed, others aim to deliver investment returns that match an underlying index. Index ETFs offer the benefit of often having lower expense ratios. However, actively managed funds could be able to react to news about marijuana stock more quickly, both good and bad.
Popular marijuana ETFs are listed below, with a mix of actively managed and index options:
• AdvisorShares Pure US Cannabis ETF (MSOS) $624.88 million
• ETFMG Alternative Harvest ETF (MJ) $398.62 million
• The Cannabis ETF (THCX) $91.59 million
• Global X Cannabis ETF (POTX) $50.61 million
• AdvisorShares Pure Cannabis ETF (YOLO) $34.32 million
There aren’t many publicly traded US cannabis equities on major exchanges since US marijuana companies are involved in federally prohibited operations. In contrast, Canadian cannabis businesses are permitted to list on significant US stock markets like the Nasdaq and the New York Stock Exchange because recreational marijuana usage was made legal in Canada in 2018.
Knowing the difference is crucial since US cannabis companies seeking funding are required to list on the secondary market or engage in over-the-counter trading (OTC). Because they lack accessible financial records and are frequently more vulnerable to price manipulation, OTC stocks can be risky.
The expansion of publicly traded marijuana stocks is good news for investors. The company’s market capitalization should be your first consideration when you weigh your possibilities. The likelihood that a company will have the financial stability to endure over the long term increases with market cap size.
A list of marijuana stocks with a market value of at least $1 billion is shown below:
Canopy Growth Corp (CGC):
Market Value: $1.30 billion
Market Value: $4.02 billion
Green Thumb Industries Inc (GTBIF):
Market Value: $2.41 billion
Tilray Inc (TLRY):
Market Value: $2.10 billion
Cronos Group (CRON):
Market Value: $1.29 billion
Village Farms International, Inc. (VFF):
Market Value: $280.93 million
Not everyone should invest in marijuana, particularly retail investors who want to take on as little risk as possible. The growth potential of marijuana stocks and ETFs, however, may convince investors with a higher risk tolerance that they are worthwhile additions to their portfolios.
Investment in marijuana is risky.
One of the main dangers of investing in marijuana is that scammers will target it because of its expanding popularity. Unlicensed vendors, unsolicited investment offers, and market manipulation are just a few of the fraudulent investment schemes related to marijuana that the SEC has warned investors about.
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