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If you’re looking to invest in cannabis stocks , there are a few things you need to know. Here’s a guide to help you get started.
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Introduction
Cannabis stocks have been on a tear over the past year, with several major companies seeing their stock prices more than double. The industry is still in its early stages, and there is a lot of potential for growth in the years to come.
If you’re thinking about investing in cannabis stocks, there are a few things you need to know. In this guide, we’ll cover the basics of how to invest in cannabis stocks, including information on the different types of companies operating in the space and the risks involved.
We’ll also provide some tips on how to pick the best cannabis stocks to invest in and where to find the latest news and analysis on the industry.
The Different Types of Cannabis Stocks
growers
The different types of cannabis stocks are growers, biotechs, and ancillary businesses.
Growers are companies that cultivate, process, and sell marijuana. These are the businesses that actually touch the plant. Some growers only operate in one state, while others have operations in multiple states.
Biotechs are companies that develop marijuana-based pharmaceutical drugs. They are typically involved in the research and development stage of bringing a new drug to market.
Ancillary businesses provide goods and services to the marijuana industry but don’t touch the plant. This can include specialised lighting and security systems, software, and accounting services.
retailers
Cannabis retailers are companies that sell cannabis products directly to consumers. This can include both physical stores and online retailers. Retailers typically buy their products from cannabis producers or growers and then resell them to customers at a higher price.
Many cannabis retailers are focused on selling recreational products, such as marijuana cigarettes and edibles, while others cater to medical patients with products like CBD oil. Some retailers may also sell cannabis-related clothing, accessories, and paraphernalia.
The largest and most well-known retail cannabis companies in North America include MedMen, Columbia Care, and Green Growth Brands. These companies all have a major presence in the United States, with MedMen having locations in California, Nevada, New York, and Florida. Columbia Care has dispensaries in Arizona, Illinois, Maryland, Massachusetts, New York, Pennsylvania, and Washington D.C., while Green Growth Brands has stores in Nevada, California, Arizona, Massachusetts, Florida, Ohio, Illinois, Michigan, and more.
manufacturers & suppliers
Cannabis companies that grow, process or distribute marijuana and related products are referred to as “touching the plant.” They are often vertically integrated, meaning they are involved in more than one stage of the cannabis supply chain.
The majority of these companies are growers and processors, followed by distributors, then retailers. Some companies touch all three parts of the supply chain. There are also companies that provide ancillary products and services to the industry, such as laboratory testing, hydroponic equipment and software for tracking inventory.
Here is a list of some publicly traded companies that touch the plant:
-Aurora Cannabis (ACB)
-Canopy Growth (CGC)
-Cronos Group (CRON)
-Tilray (TLRY)
manufacturers & suppliers
There are also a number of companies that provide products and services to cannabis growers and retailers, but don’t actually touch the plant. These companies are referred to as “ancillary” businesses. They include everything from software providers to growers’ equipment suppliers to makers of rolling papers.
Some publicly traded ancillary businesses include:
-Scott’s Miracle-Gro (SMG)
-GW Pharmaceuticals (GWPH)
How to Research Cannabis Stocks
Cannabis stocks are a new and growing industry. As with any new industry, there is a lot of unknowns and a lot of speculation. So, how do you go about researching cannabis stocks? In this section, we’ll cover some tips on how to research cannabis stocks.
company financials
The very first step you need to take when considering how to invest in cannabis stocks is to look at a company’s financials. You can find this information on the company’s website or by looking up the company’s filings with the Securities and Exchange Commission (SEC).
When you’re looking at a company’s financials, there are a few things you want to pay attention to:
-Revenue: This is the total amount of money that the company brings in from sales. It’s important to look at revenue because it shows whether or not a company is actually making money from its operations.
-Expenses: This is the total amount of money that the company spends on things like salaries, rent, and other operating costs. It’s important to look at expenses because it shows how much it costs the company to run its business.
-Profit: This is the difference between a company’s revenue and its expenses. It shows whether or not a company is making money (or losing money).
company management
In order to find the best cannabis stocks to invest in, you need to do your homework and research the various companies involved in the industry. This includes looking at their financial statements, as well as reading up on their management team.
It is also important to pay attention to the trends within the industry, as this can give you a good idea of which direction the market is moving in. For example, if you notice that more and more states are legalizing marijuana, then this is likely to lead to increased demand for cannabis products.
Finally, don’t forget to consider the risks involved before investing in any stock. Cannabis stocks can be volatile, so it’s important to only invest what you can afford to lose.
analyst ratings
Before investing in any stock, it’s important to do your research. This is especially true for volatile and high-risk industries like the cannabis industry. The first step in your research should be to look at analyst ratings for different stocks.
Analyst ratings are opinions from financial experts about whether a particular stock is a good buy, hold, or sell. These ratings can be helpful in determining which stocks are worth investing in. However, it’s important to remember that analyst ratings are just opinions, and they may not always be accurate.
To find analyst ratings for cannabis stocks, you can start by looking at financial news websites like Bloomberg or CNBC. These websites often have sections devoted to specific industries, including the cannabis industry. You can also look at stock research websites like Seeking Alpha or TipRanks. These websites provide aggregated ratings from multiple analysts for different stocks.
When looking at analyst ratings, pay attention to the rating distribution for a particular stock. A stock may have a high overall rating, but if most of the analysts who cover the stock have a “hold” rating, it may not be as attractive of an investment. Conversely, a stock with a low overall rating may be worth considering if most of the analysts who cover it have a “buy” rating.
In addition to analyst ratings, you should also look at other factors like price-to-earnings ratios and recent share price performance when determining whether a particular cannabis stock is worth investing in.
How to Buy Cannabis Stocks
When it comes to investing in cannabis stocks, there are a few things you need to keep in mind. The first thing is that you need to do your research. You need to understand the market and the risks involved. You also need to have a plan and know what you’re looking for. This guide will give you some tips on how to buy cannabis stocks.
online stockbrokers
Now that cannabis is legal in Canada, investors are looking to get in on the action by buying cannabis stocks. But how do you buy cannabis stocks?
There are a few ways to buy cannabis stocks. The most popular way is through online stockbrokers. Online stockbrokers allow you to buy and sell stocks without having to go through a traditional broker. This is the most convenient way to buy stocks, and it’s also generally the cheapest.
Another way to buy cannabis stocks is through a traditional broker. Traditional brokers are usually more expensive than online stockbrokers, but they can offer more advice and guidance if you’re new to investing.
If you’re interested in buying cannabis stocks, we recommend doing your research and speaking with a financial advisor before making any decisions.
traditional stockbrokers
There are only a handful of ways to buy cannabis stocks. The most common and most popular way is through traditional stockbrokers. These are the same people who would help you buy stocks in more traditional companies like Microsoft or Walmart. They will charge you a commission for each trade, but if you’re buying small amounts of stock, this is probably the best way to go.
The other way to buy cannabis stocks is through online brokers. These are similar to traditional stockbrokers, but they don’t have brick and mortar locations. They will also charge you a commission for each trade, but their commissions are often lower than traditional stockbrokers. The downside to online brokers is that they can be more difficult to work with if you have questions or problems with your account.
The third way to buy cannabis stocks is through an exchange-traded fund (ETF). ETFs are investment funds that hold a basket of assets, including stocks, bonds, and other securities. They are traded on stock exchanges, just like regular stocks, and they can be bought and sold throughout the day. The main benefit of investing in an ETF is that it offers diversification, which means that your risk is spread out over a number of different investments. The downside to ETFs is that they come with fees, which can eat into your investment returns.
The fourth and final way to buy cannabis stocks is through mutual funds. Mutual funds are similar to ETFs in that they hold a basket of assets, including stocks, bonds, and other securities. However, mutual funds are not traded on stock exchanges; instead, they are bought and sold from the fund company itself. Mutual funds also come with fees, but these fees are often lower than those associated with ETFs.
Risks of Investing in Cannabis Stocks
Cannabis stocks have been on the rise ever since Canada legalized recreational marijuana use. However, there are certain risks associated with investing in these types of stocks. For one, the industry is still in its infancy, which means that there is a lot of volatility. Additionally, the legal landscape in the United States is still uncertain, which could have an impact on the industry as a whole. Let’s take a closer look at some of the risks of investing in cannabis stocks.
federal legalization
The federal government in the United States still classifies marijuana as a Schedule I drug, meaning it has a high potential for abuse and no accepted medical use. This makes it illegal to grow, sell or use cannabis in any form across the country. As a result, cannabis companies that operate in the U.S. are doing so in violation of federal law.
This creates a number of risks for investors. First, there’s the risk that the company could be shut down by the government at any time. Second, there’s the risk that employees of the company could be prosecuted under federal law. And third, there’s the risk that assets of the company could be seized by the government.
All of these risks are real and have happened to companies operating in the U.S. In 2012, for example, the DEA raided more than a dozen medical marijuana dispensaries in Colorado. In 2013, they shut down 70 dispensaries in Washington state. And in 2016, they shut down nearly 400 dispensaries in California.
Despite these risks, some investors are willing to take them because they believe that federal legalization is inevitable and that these companies will be well-positioned to capitalize on it when it happens.
over-saturation of the market
The risks of investing in cannabis stocks are numerous and varied, but one of the most concerns is the potential for over-saturation of the market. With more and more states legalizing marijuana for either medical or recreational use, there is a fear that the industry could become oversaturated, leading to lower profits and more volatile stock prices.
Another risk is the potential for federal intervention. While it seems unlikely that the federal government will completely outlaw marijuana, they could still enact policies that would make it more difficult for businesses to operate in the industry. This could lead to lower profits and less investor confidence in the sector.
It’s also important to remember that many cannabis stocks are still relatively new and untested. This means that there is a higher degree of risk involved in investing in these companies. You should always do your own research before investing in any stock, but this is especially true with cannabis stocks.
All told, there are a number of risks involved in investing in cannabis stocks. However, many investors believe that the potential rewards outweigh the risks. With careful research and a solid investment plan, you may be able to profit from this growing industry.
