Considering an Investment in Marijuana Stocks? Here’s What You Need to Know

    The cannabis stock market is growing, and prepared to hit massive highs. Here are the Pros and Cons of everything from stocks to seeds.

    Marijuana was stigmatized as a schedule I drug for years, and was essentially illegal throughout the world. In the last decade alone, entire countries, like Canada and Uruguay, have legalized weed for recreational use. More states have come to lift criminality charges and bans on the drug. Online marijuana seed dealers are able to ship their wares internationally. 

    The business is indeed booming, while most definitely still in its infancy, more and more people are hoping to get in on the ground level. With dreams of seeing further legalization and wider reaching business opportunities, entrepreneurs are looking at reaching into many of the different associated markets. Including stocks.

    But is it really as safe a bet as it seems? With the market being so new, and largely unstable due to confusion over litigation and what can, and cannot, be legitimately achieved; uncertainty still hovers closely. 

    How the Marijuana Market Works

    High-Supplies, a marijuana seeds online supplier, showcased how best to face this uncertainty with an expanding business plan. Supplying seeds and other growth focused products in the Netherlands has never been a difficult business. “What we found, was once we were legally able to expand our reach [as marijuana laws eased] our business exploded.” They told us. 

    While navigating laws and policies isn’t always a black and white process, learning how to exist and grow alongside them has been what’s kept High-Supplies alive. Not only keeping them afloat, but improving their business altogether. “So really, the best advice we could give anyone considering an investment in the marijuana market is prepare to be flexible.” 

    And for some businesses, that deep seeded need for flexibility can be their undoing. As much of the marijuana market revolves around novel principals and far from normal practices.

    Cons of the Marijuana Market 

    Perhaps the most difficult part of managing Mary Jane investments and businesses is how the money works. As marijuana is still considered a Schedule I drug, the manufacture and dispensation of the substance is still considered illegal at a federal level. So any revenue that a business makes from the transactions, can’t be deposited into a federally insured bank. Any FDIC insured bank that does take the risk to handle these funds is technically susceptible to money laundering changes. Which few banks will be willing to risk, and as an American, finding a non-FDIC bank can feel pretty impossible. 

    Because of laws like this, the cannabis markets have largely been cash run business that don’t really compete at a stock market level in the US. So if you’re looking to invest, it can be difficult to find a way. Not to mention, because of this cash based requirement, credit cards, debit cards, and checks can’t be used by your customer base. Making it too much of a hassle for many potential clients- further decreasing revenue. 

    Also, as banks aren’t handling the money, gaining interest off of capital is impossible and loans for startup cash can’t be obtained in the standard way. Cannabusiness also isn’t eligible for many of the tax credits and deductions that other businesses are party to. But, the tax man is still happy to take his cut of the profits, sometimes facing tax rates of up to 70%. 

    Pros of the Marijuana Market

    Because you won’t find many marijuana stocks on the Nasdaq or NYSE, investors are forced to head to OTC markets. While these markets are highly unstable and difficult to properly navigate for green investors, for the well-seasoned investor, they can be a gold mine. It is possible to invest in foreign markets directly, it can be really difficult to pull off. There are associated risks when it comes to money exchange and taxation, so if you plan on investing in a foreign market, it’s important to do your research. 

    Timing is also crucial for these sorts of businesses. Whether it’s in cannabis seed retailers, health and beauty, pharmaceutical, or any number of other sectors, cannabis stock values can only go so high. As the markets and laws develop, these returns are due to see a leveling off. Most of the big money that is being discussed in cannabis markets is largely speculation. So understanding that the profits that are expected may not actually translate into the profits that will be seen is crucial for any potential investor. 

    So while many newer investors tend to look at marijuana stocks and investments as a way to see massive gains quickly, the opposite is actually much more true. While this doesn’t mean that you shouldn’t invest in Cannabusiness, it definitely means that you should do it carefully and wisely.

    Invest at your own risk, view expressed may not necessarily shared by New Theory.

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    • Joselin Estevez

      Social Media Director

      Social Media Director at X Factor Media

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