How Investing in Cannabis Works

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The cannabis industry has quickly become one of the most talked about markets of the modern day. With so many people bringing capital into this new industry, often people are wondering if investing is similar to investing in other markets. The short answer to this question is yes, but there are certain differences that can make cannabis stand out.

Currently, as many as 33 states in the U.S. have passed laws allowing for the use of cannabis, with many of those offering recreational cannabis as well. It’s clear that the majority of the country is in favor of legalizing cannabis, and as this data continues to grow, so does the market.

In terms of investing in cannabis, there are several options that come into play. All of this, however, depends on the investing strategy one wants to go with. For some on the safer side, there are various ETFs or exchange-traded funds that can be a solid option as they offer lower volatility and higher exposure to the broad marijuana industry.

Several cannabis ETFs have come out in recent times showing large signs of growth which is a positive reason to take a look at them. Since these ETFs can be bought and sold within the U.S., often times they present an easier world to navigate than some of the more individualized or ancillary companies.

Within the U.S., it can be difficult to purchase marijuana stocks as the substance is still illegal in the nation. Despite this, there are many options that exist when looking to invest. Only recently have several exchanges such as the NASDAQ and NYSE began to list large marijuana companies for trading on their platforms. This has helped to open up the market to a place that has never before been seen. Arguably, we are living in the friendliest time to invest in cannabis stocks that has ever existed.

On the other hand, many companies in the cannabis industry are still listed on smaller exchanges like that of the OTC market. This, however, can get tricky as OTC stocks usually have less liquidity to offer as well as the difficulty that can sometimes come with actually purchasing the companies. This should not dissuade investors, however, as there are a large amount of companies on the OTC market that are innovating like never before.

One of the primary methods of investment is investing in companies that grow cannabis. These businesses known as pure-play cannabis stocks have the most exposure to the market. Despite how infant the industry is, however, they have been able to see their market caps shoot into the billions. These growers are also working on producing cannabis to be sold on the international market as well which continues to make future prospects interesting.

All in all, investing in the marijuana stock market is much easier than it seems. As always, the best advice is to do the research and know what one is investing in before putting down any money into the industry.

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