Investing in Marijuana Stocks: Benefits and Shortcomings


When it comes to investing in medical marijuana, whether or not to trust in this new market becomes the largest issue among investors. Because of the emerging industries history and connotations, many investors are put off despite the massive potential within the medical marijuana industry. For many years, plant has been associated with illegal ties and stigma’s that lead to misinformation about its benefits.

Now that the plant is legal in more than half of the country, the US as a whole has become more accepting of the plants possibilities.

Are Marijuana Stocks In Your Best Interest ?

Due to the fact that this industry has seen unparalleled growth in the past 10 years, cannabis as a whole provides investors with extremely appealing potential for investing. The past 5 years have seen the number of listed companies associated with the plant grow exponentially as private equity funds and other associated companies grow as well. All of this has led to the legitimization of the cannabis industry as a whole.

Last year alone, Colorado brought in almost one-billion dollars in revenue from cannabis sales seeing 10% of that go to taxes. In the last few years the industry has doubled, seeing increased “consumer adoption” according to an online-based financial review. Many market predictions have forecast its growth over the next half-decade to skyrocket as a whole.

Because of marijuana’s medical necessity to many, the market is seen as recession proof. Economists across the country are describing the product as a consumer staple (although it is early). The industry may not have any long-term numbers to help label rules for its growth and decline, but one could easily see and defend its necessity in the market given its inelastic demand within the market.

As new uses for the plant are found everyday, the utility of the medicine continues to rise. From pharmaceuticals, to topical ointments, to edibles the ever-growing field of products ensures the stability of the consumers need. Scientists are continuously discovering new uses for the plant and its incredible ability to treat a wide range of diseases and ailments. Because of this, not only are companies who actually touch the plant seeing growth, but the whole world of big Pharma is seeing growth as well.

The number of pros associated with investing in marijuana are high but there are a few cons to investing in the plant as well. Due to the various federal regulations, there stands to be a smudge of uncertainty in the market. The plant is legal in various states as mentioned before, but marijuana remains a schedule one drug under federal legislation leading to a false view of its benefits. Its drug scheduling puts it in a category with drugs such as heroin, ecstasy, and many drugs with no known medicinal benefits and high potential for abuse.

Because of the federal legislation, the market has seen some fragmentation as laws vary from state to state. What’s legal in California may be illegal in Washington and vice-versa. California has aggressively fought the commercialization of cannabis whereas Ohio has spent its time fighting the monopolization of marijuana companies. Investing in the market as a whole can become confusing at times when legislation is ever-changing and still being planned out.

Investments in new industries will always pose a risk to the investor, but when it comes to marijuana, the industry is here to stay. There may be a few factors in why NOT TO invest in the budding market, but the pros TO invest outweigh the cons by a landslide. In short, there is a high potential for gain in the industry of medical marijuana, but the smart investor should still be wary of not only legislative boundaries, but social connotation as well.


Please enter your comment!
Please enter your name here