The industry on cannabis has been growing with rapid success and influence over the course of the past several years, but many new stocks have come to fruition with the new state of legislation in the U.S. and abroad. With new markets developing around the world and in places like Canada, it seems as though the market is only poised to continue growth into the near future.
Co-founder and Editor in chief of the Green Market Report, Debra Borchardt, states that when looking for a cannabis company to invest in, one should know if “the company makes any profits or have a realistic chance of making profits? Does it disclose all the critical information in an earnings press release? Who are the insiders and management team?” This seems to be incredibly important because many investors simply look at the numbers on a chart and not at the underlying business model. Predicting whether or not a company will be profitable in the future given their business ideas can help to determine whether or not it will be a valuable investment for the future. Cynthia Salarizadeh, co-founder of the Green Market Report states a similar sentiment that one should consider “the team, business model and revenue, and the company history.” The history of a company is also very valuable as it can help to determine where they may go in the future.
Borchardt also states that one should look at the market as a whole in the specific case of Canadian stocks. She states that “I think that the Canadian stocks are extremely overvalued and will correct at some point. The problem is that I can’t predict when that will happen. A company should not have a billion-dollar valuation if it only has annual sales of less than $15 million and that is just one example.” This overvaluation she is referring to is something that is not a negative in any way but is a natural method of markets developing. The Canadian market may see this correction due to the over-prediction of demand in the Canadian cannabis sector. Many Canadian companies are working to increase production due to the idea of a higher demand with new legislation potentially coming this summer. Although this is a normal strategy, many are worried that the demand may not be as high as anticipated and this could lead to lower marijuana prices. This will most likely sort itself out as any market would, so there is nothing to be worried about.
One of the best investments in the marijuana industry that many have overlooked due to their low volatility is the idea of ancillary companies. These ancillary companies could be anything from money storage and transportation to packaging of cannabis products. With new regulations identifying extremely specific ways to handle the industry, there are many developing sub-industries profiting off of these new laws.
The risk of the cannabis industry may at sometimes be high, but the market cannot be held accountable for this because it is very characteristic of any infant industry. As the market develops with new regulations and standards, the likelihood is high that there will continue to be a high rate of growth throughout the industry. Only time will tell how the combination of growing demand and accurate legislation, will help to build the overall market for the future. With so many individuals now turning to pot for everything from pain management to cancer treatment, there is a large amount of continuing potential within the marijuana market to grow throughout the next coming years.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
