The marijuana industry has been incredibly lucrative for many investors who got in early, but the new legislation in the market has helped to continue the positive trends throughout. The cannabis market as a whole has already hit the billions mark, with $3 billion in cannabis investments in the U.S. during the first half of 2018. This means that there is a lot of room to still grow, but that investments are continuing to pour in.
The marijuana market functions similarly to other industries, but there are a few key differences that have changed the investor strategies for the better. One of the newest ways to invest in the cannabis market has been through the use of Exchange-Traded Funds or ETFs. These ETFs function without giving the investor a direct exposure to the market, but still offering large potential gains for a portfolio. Many investors swear by ETFs and they are just now taking shape in the cannabis industry. One report states that “There are a few exchange-traded funds to consider in the marijuana stock market: the ETFMG Alternative Harvest ETF (NYSE:MJ), the Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF) (TSE:HMMJ), and the Evolve Marijuana ETF (SEED.TO) to name a few.” The ETFs are full of hand-picked stocks by investors who have already done the heavy back-end work, and are very simple to view and determine which to pick. The ETFs have essentially made investing in the cannabis market extremely easy.
One of the most popular ways to invest in the cannabis market has been through the Over-The-Counter market or OTC exchange. This exchange allows companies to list and gain the capital from going public, but without the issues of legislation in various nations getting in the way. In the U.S., cannabis is still scheduled as a Schedule I narcotic, which means that from a federal level, it is very much still illegal. Although this scheduling does not coincide with the reality of the substance, it has meant that companies have had to list on the OTC exchange as opposed to more notable exchanges like the NYSE or the NASDAQ. The OTC market on cannabis is extremely large and presents a lot of opportunity for investors looking to make smaller trades in the industry, but still, have exposure to the market.
The only issue with trading on the Over-The-Counter market is the issue of the company’s legitimacy. Since the OTC does not require a large amount of fillings, it can often be difficult to judge a company’s financials among other information.
The most important part of any investment is that of the research that an individual does on the company. Although the marijuana market is different in many ways from other industries, one thing always remains and that is the data that backs a company up. Any investor should always look at the financials, quarterly earnings and other information that is available through the various online resources dedicated to this information.
The North American Marijuana Index is a great place to start for anyone looking to get into the cannabis industry as tracks the largest marijuana stocks throughout the industry. This can be a great resource to help decide which stocks to put in one’s portfolio before investing. The marijuana market as a whole is still very young which means that the rules with investing are not fully established at this point. The hopes are high that in the future, strategies for investing in cannabis will become more and more cemented.
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