- do your research
- Decide how you want to invest
- Consider the risks
Looking to buy cannabis stocks? Here’s a step-by-step guide on how to get started.
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do your research
The most important thing you can do before buying any stock is to research the company and the industry. With the recent legalization of marijuana in Canada, there are now many options for investing in the cannabis industry. However, it is important to remember that the marijuana industry is still very new and risky. Make sure you understand the risks before investing.
Learn the difference between hemp and marijuana
Hemp and marijuana are two popular terms used to describe the Cannabis plant. There is a lot of confusion surrounding the two, which is compounded by the fact that hemp and marijuana have been used interchangeably for many years. In short, hemp is a type of cannabis that contains 0.3% or less of THC, while marijuana contains more than 0.3% THC. To put it another way, hemp is cannabis with THC levels so low that it will not get you high, while marijuana will.
Find out which companies are publicly traded
Before buying cannabis stocks, do your research and find out which companies are publicly traded. The two main exchanges for cannabis stocks are the Toronto Stock Exchange (TSX) and the Canadian Securities Exchange (CSE).
The TSX is Canada’s largest stock exchange, and it’s where most of the big players in the cannabis industry are listed. The CSE is a smaller exchange, but it’s growing in popularity among cannabis companies.
Once you know which exchanges you want to focus on, you can start researching specific companies. Look at their financial statements, read their news releases, and get a feel for their business model.
Understand the risks involved
You should never invest in anything without first doing your research, and that definitely applies to the cannabis stock market. Although there are some incredible opportunities for growth in this industry, there are also some very real risks that you need to be aware of before investing your hard-earned money.
Here are a few of the risks involved in buying cannabis stocks:
1. The industry is still highly regulated.
In spite of the growing acceptance of cannabis around the world, it is still classified as a Schedule I drug by the US government. This means that it is still considered to be illegal at the federal level, which creates a great deal of uncertainty for businesses operating in this space.
2. There is a lack of historical data.
Because the cannabis industry is still relatively new, there is a lack of historical data that investors can use to make informed decisions about where to put their money. This makes it difficult to predict how these stocks will perform in the future and creates a higher level of risk for investors.
3. The market is highly volatile.
Cannabis stocks tend to be much more volatile than other types of investments, so investors need to be prepared for extreme highs and lows. This can be incredibly stressful for those who are not used to such fluctuations and can lead to some investors making rash decisions that they later regret.
4. There is a potential for scams.
Unfortunately, there are always people looking to take advantage of others, and the cannabis industry is no exception. Before investing in any company, make sure you do your research to ensure that it is legitimate and not just another Cannabis stock scam.
Decide how you want to invest
You have a few options when it comes to investing in cannabis stocks. You can buy stocks, which are shares of ownership in a company. You can also buy mutual funds or exchange-traded funds, which are baskets of stocks that are managed by someone else. There are also options for investing in cannabis startups.
Buy stock in a cannabis company
If you’re looking to invest in cannabis stocks, there are a few things you need to know. The first is that the industry is still in its infancy, which means it’s risky. The second is that there are two types of companies you can invest in: growers and ancillary businesses.
Growers are companies that actually grow and sell cannabis. Ancillary businesses provide products or services to the cannabis industry but don’t touch the plant itself. These can be anything from software companies to growers’ equipment suppliers.
If you’re going to invest in a cannabis stock, Growers usually have higher returns but are also more volatile. Ancillary businesses are usually more stable but have slower returns. It’s up to you to decide which type of company you want to invest in.
Once you know what type of company you want to invest in, the next step is finding one that looks like a good investment. There are a few things you should look for:
-A company with a solid business plan
-A company with experience in the industry
-A company that’s generating revenue
-A company with positive reviews from analysts
Invest in a marijuana-focused ETF
Marijuana-focused ETFs are a good way to get exposure to the cannabis industry without having to pick individual stocks. These funds invest in a basket of marijuana-related companies, so you get instant diversification. And because they trade on major exchanges like the NYSE and Nasdaq, they’re easy to buy and sell.
The Horizons Marijuana Life Sciences ETF (HMMJ) is one of the largest and most popular marijuana ETFs. It invests in companies involved in the marijuana industry, including growers, pharmaceutical firms, and ancillary businesses. The fund has more than 50 holdings, with its largest positions being Canopy Growth (18%), Aurora Cannabis (12%), Cronos Group (8%), and Tilray (6%).
Another popular option is the ETFMG Alternative Harvest ETF (MJ), which tracks global companies involved in the legal cannabis industry. Its top holdings include Scotts Miracle-Gro (SMG), Canopy Growth, Aurora Cannabis, GW Pharmaceuticals (GWPH), and Cronos Group.
Put money into a cannabis-industry mutual fund
Cannabis mutual funds are a relatively new investment option, but they provide investors with an easy way to tap into the burgeoning cannabis industry without having to pick individual stocks. As of early 2018, there were only a handful of these mutual funds available, but that number is expected to grow in the coming years.
If you’re interested in investing in a cannabis mutual fund, be sure to do your homework first. Some of these funds are quite risky, so it’s important to understand the underlying investments and make sure they fit with your overall financial goals.
Consider the risks
Cannabis stocks have been on a tear in recent years, as more and more countries legalize marijuana. The industry is still in its early stages, which means there are both risks and opportunities for investors. Before you buy any cannabis stocks, you should consider the risks involved.
The legal landscape is still shifting
The legal landscape is still shifting
Despite a growing number of states legalizing marijuana for medicinal or recreational purposes, the drug is still illegal under federal law. That creates a host of challenges for investors, including banks that are hesitant to provide financing and growers that can’t transport their product across state lines.
And there’s another potential problem on the horizon: The U.S. Justice Department is currently reviewing a policy that has allowed the legal marijuana industry to flourish by refraining from enforcing federal laws in states that have legalized the drug. If that policy is reversed, it could create even more uncertainty for investors.
The industry is highly regulated
The cannabis industry is highly regulated, and companies operating in the space are subject to a number of risks. For example, companies may be subject to regulatory change, intense competition, and changing consumer preferences.
Investors interested in the industry should research companies carefully and consider the risks before making any investment decisions.
There is still a stigma attached to marijuana
The plant has been used for centuries for its hempen fibers, and more recently as a recreational drug. While many people still consider marijuana to be an illegal substance, it is important to remember that there are risks associated with any investment.
Marijuana stocks have been some of the hottest investments in recent years, but there are still a lot of unknowns when it comes to the industry. As more states legalize marijuana for recreational or medicinal purposes, the industry is expected to grow, but there is still a lot of uncertainty surrounding the fledgling industry.
Here are some of the risks associated with investing in marijuana stocks:
-The legal status of marijuana is still uncertain. While many states have legalized the use of marijuana, it is still considered an illegal substance at the federal level. This could change in the future, but for now, it creates a lot of uncertainty for investors.
-The marijuana industry is still relatively new and immature. This means that there are not many established companies and most are not profitable yet. This can make it difficult to find good investments and weed out the bad ones.
-Many marijuana companies are small and not well-known. This can make them more volatile and riskier investments.
-There is still a lot of stigma attached to marijuana use. This could hamper the growth of the industry and make it difficult for companies to raise capital or expand their businesses.