The cannabis market throughout the past several years has managed to be extremely lucrative for those who have decided to invest. With new legal measures being put in place around the world and especially in North America, it seems like now is a better time than ever to look into the marijuana industry.
The weed market is still very much in its infant stages which means that there is a large amount of room to grow, as well as a large amount of information that comes only with time. Debra Borchardt, co-founder, and editor-in-chief of the Green Market Report states that one should first learn whether or not 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?” These are usually the first questions that one should ask before putting money into any stock let alone the cannabis market. Most companies in the industry are extremely transparent and have the majority of their financial information in easily accessible websites online. She continued to state that one should consider “the team, business model and revenue, and company history.” The common sentiment seems to be that someone should first look into the details of the company regarding financials, and who the team consists of. These should always be the most important factors in making a decision on whether to invest or not.
One of the newest things to look for in the growing cannabis market is the production capacities of a company. Since there are many different and large growers in the industry, one of the main things that continue to separate these companies is the amount of production that they are capable of. Many companies have been upping their output, especially in North America, given the new recreational legalization across Canada.
Borchardt states further that in regard to the Canadian market, “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.” Although many economists have echoed a similar opinion, it seems as though the first correction has potentially happened, given the state of the current market. Many have stated that there may be an issue with oversupply given the growing growth capacity with the anticipation of legalization, but this may be positive in the end. The overproduction could likely result in lowering prices of cannabis, which not only would bring more customers into the industry, but it would help one of the newest parts of the market; export.
Lastly, one of the main focuses of many investors looking to get into the industry has been through the ancillary markets that are associated with cannabis. These ancillary markets present a very solid way to make an introduction into the industry without a direct exposure to the market. The ancillary industries such as packaging, marketing and so on have managed to provide some of the best and most consistent returns in the industry as they are not as subject to volatility and market fluctuations as stocks that touch that physical cannabis plant.
The market on cannabis as mentioned prior is still incredibly new, which means that there are still a large amount of factors to figure out before the market can begin to settle down. The hopes are high that over the course of the next several years, the industry will begin to reach its full potential in terms of legality and public sentiment regarding the substance.