The marijuana stock market is predicted to only increase within the next decade. As recreational and medical use acceptance continues to increase, marijuana stocks will be put in front of more and more investors. While many investors will find success investing in cannabis stocks, there are a few reasons why people hate marijuana stocks.
New Market
The marijuana market is new. The age of this market makes many investors hesitant because they don’t know the absolute success rates of the stocks. While many investors want to play it safe, others find success taking risks in the market. However, some might find that the new marijuana stock market is just too new, and they don’t know how it will perform.
Unpredictable
Along with being new, this market can be extremely unpredictable. Investors are hesitant to invest in marijuana stocks because they don’t know how it will perform. Even the most experienced analysts and investors who can make predictions based on their knowledge of stock markets in general, can’t predict much about the new market. What makes many investors weary is that marijuana has not been legalized on the federal level, so until that happens, many investors will choose to opt out of these opportunities.
Lack of Knowledge
Many investors, even if they are knowledgeable of the stock market, lack the knowledge of the marijuana industry in order to invest in marijuana stocks successfully. With this market changing every day, there are new things investors have to learn, and often. Investors are busy people, so they lack a willingness to continue to learn about the new marijuana stock market. As many investors have found success with other markets, marijuana may just be too new for them to learn about.
It can also be difficult for investors to find reliable data on American marijuana companies because marijuana is federally illegal. This means that they can’t list on Nasdaq or the New York Stock Exchange, so they list on Candian stock exchanges. Because of this, getting the correct information could prove difficult for investors and that’s when they’ll reconsider investing.
Risks
Investing in marijuana stocks does carry risk. Once your money goes into a stock, there is no guarantee that you will see a return. While there are risks when it comes to any stock, there are some specific to US marijuana stocks.
Prosecution: Although many states have legalized marijuana, whether for medical or recreational use, these laws still violate federal marijuana laws. While it may seem unlikely to many, it is possible that marijuana businesses operating in the United Sites could be targeted, making investors hesitant.
Financial: Even if marijuana businesses aren’t prosecuted, obtaining banking and financial services is difficult. Financial institutes that handle money made from marijuana-related companies could be accused of money laundering, making banks and other financial institutions hesitant to work with marijuana businesses, forcing these companies to run on cash, making them susceptible to Roberto and limited their ability to obtain the capital needed for expansion. However, many banks have decided to do business with marijuana companies, so these risks aren’t as high as they used to be.
Time Consuming
Trading marijuana stocks can be time-consuming. Because you have to do your homework and learn about the industry and different businesses in which to invest, many investors are opting out of investing in such a new market. Because marijuana stocks can drastically and unpredictably change, a lot of time and money must be invested to get a high return.
