• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • HOME
  • RECOMMENDED BOOKS
  • FREE TOOLS
  • CONTACT US
  • ABOUT

The Fortunate Investor

Investing, Business & Personal Finance For Wealth Builders

  • Save Money
  • Invest Your Money
  • Get Out of Debt
  • Making Money Online
  • Family & Money
  • Taxes
  • Business
  • Retirement
    • Retirement Calculator
Home » How to Invest in Cannabis Stocks

How to Invest in Cannabis Stocks

October 10, 2019 By The Fortunate Investor | This article may contain affiliate links. For more information visit our Disclosure

Tweet
Share
Pin
Share
Share

Marijuana Pot Weed Cannabis Stock Company Business Market 3d IllustrationHave you heard of the new gold rush on Wall Street? It’s actually a green rush of cannabis stocks. Some stocks have had big returns in just a few years for investors. Many compare it to the early .com days when Google and Amazon were affordable stocks.

Learning how to invest in cannabis stocks isn’t as simple as investing in reliable blue-chip stocks. Since this is an emerging industry, people want to invest in any and every company that has to do with cannabis.

That’s not a very smart investment strategy and can cause you to lose a lot of money.

Want to know more about investing in cannabis stocks?

Read on to learn more about these stocks and how you can create your own investment strategy.

Understand the Market and Products

How much do you really know about the cannabis industry? Maybe you’ve seen CBD products everywhere these days and think that these stocks are the next big thing.

The fact is that the cannabis industry is very dynamic and diverse. The laws and regulations around cannabis products are changing all the time. It’s up to you to do your research and understand the legal implications behind products, as that will affect the stock price.

There are three main types of cannabis stocks. These companies offer something different for each investor.

Biotech Companies: These are companies that are committed to bringing products to the medical marijuana space. Some of these companies rely on developing synthetic drugs, so you want to do research before you invest.

Suppliers: You may be most familiar with these companies. These are product providers that you’ll see at retail stores on online. They may deal with marijuana products directly or provide supplies to marijuana growers.

Growers: When you think of a marijuana grower, you might be thinking of a small local farmer who cultivates plants for a living. Growing marijuana is big business, especially in Canada, where marijuana has been legal since late 2018. You’re likely to find Canadian stocks rather than U.S. stocks for these companies.

Research Your Options

Once you understand the market, it becomes much easier to figure out the stocks that are great investing options.

You want to take the time to do additional research on various funds and individual stocks. Look closely at market trends, competitive risks, and cash flow of companies. You want to make sure that your investment is going to hold up in the long term.

Cannabis Stocks are a Long-Term Play

Stock Shares for Beginners A Guide on How to Start Investing

The thing about getting in on the ground floor of an industry is that it is very volatile early on. Remember the .com crash in the early 2000s? A lot of investors bought into the bubble of unprofitable companies only to see these companies go away.

You don’t want to invest in cannabis stocks with short-term thinking. That won’t do you any good. That’s why researching companies is important. You have to find the ones with growth potential for 20 years, not just next quarter.

You’ll be able to spot the next Google, Amazon and Netflix stocks of the cannabis industry when you apply a long-term approach. It takes a lot of patience and it forces you to think logically. It takes the emotion out of investing, which is critical to becoming a successful investor.

How to Invest in Cannabis

There are different types of investment vehicles for investors who want to get into cannabis stocks. You’ll find everything from apps to penny stocks. Here are the ways you can invest in cannabis.

Be an Early Investor

It’s rare when you come across a company that has so much potential from the very beginning. You should be on the lookout for these opportunities, though. You can be well-positioned to become an angel investor.

As an angel investor, you work with a company and provide the funding to get it started. These are very high-risk investments as these companies can burn through cash faster than you can provide it. The payoff potential can be huge, though in the form of a company sale or IPO.

An Investment App for Beginners

Micro Investing Options Infographic

There are apps that help you find the right investment opportunities for cannabis socks. You want to make sure that the app you use is regulated by the Securities Exchange Commission (SEC).

Regulated apps are subject to strict guidelines when making stock recommendations. That will help you grow your investment over time.

Traditional Stock Exchanges

You might be looking for cannabis stocks on the New York Stock Exchange or NASDAQ. You’ll find a few stocks listed there because marijuana is still federally illegal. However, if you look at other exchanges like Toronto’s Stock Exchange or the London Stock Exchange, you’ll see cannabis stocks listed there.

Over the Counter (OTC) Stocks

This is the most common place for cannabis stocks to be traded. The downside is that there isn’t a lot of oversight of these stocks. That can put your investment at a greater risk. Your research into different companies becomes more important to protect your investment.

OTC stocks are also called penny stocks because the prices of the stocks tend to be very low. You can usually get a stock at less than $5 a share.

Index Traded Funds

Index Traded Funds

These funds are also known as ETFs. They function like mutual funds in the sense that you’re pooling your money with other investors to buy stocks. That increases your purchasing power.

The difference here is that you’re not investing in individual stocks but tracking different indices.

Start Investing in Cannabis Stocks

It’s rare when you can get in on the early stages of an industry. You may have missed the gold rush and the tech boom, but cannabis presents a golden opportunity to investors.

It’s not too hard to learn how to invest in cannabis stocks. It is important to always do your due diligence before investing. Do your research and always stay up to date on the latest changes in the industry.

Do you want more investing tips? Keep scrolling for more great articles.

  • About
  • Latest Posts
The Fortunate Investor
The Fortunate Investor at FortunateInvestor.com
The Fortunate Investor is the finance half of the husband and wife duo behind this website. Michael's finance and investment advice is rooted in an MBA and 20 years experience as an entrepreneur, banker, and manager in the financial services industry.
Latest posts by The Fortunate Investor (see all)
  • Business 101: Streamlining For Success - March 31, 2021
  • Easy HR Tips For A Small Business - March 28, 2021
  • Financial Management Is Key For Both Your Personal And Professional Life - March 28, 2021

Primary Sidebar

Popular Articles

Is Your Company Website Missing These 5 Ingredients

Is Your Company Website Missing These 5 Ingredients?

A lot of important ingredients are required when building a successful company website. Below are … Read More about Is Your Company Website Missing These 5 Ingredients?

How Landlords Can Increase Value For Their Tenants

How Landlords Can Increase Value For Their Tenants

Many people seem to think that working as a landlord is an easy job, and while there certainly is a … Read More about How Landlords Can Increase Value For Their Tenants

Investments to Make in 2021

Investments to Make in 2021

Maybe you haven’t dipped a toe in the investment market yet. Many of us have a savings account we … Read More about Investments to Make in 2021

Errors Made When Attempting To Retrieve Lost Art

Errors Made When Attempting To Retrieve Lost Art

You need to act correctly if your art has been stolen or gone missing so that you have the highest … Read More about Errors Made When Attempting To Retrieve Lost Art

What Should A Trader Know Before Getting Started In The Market

Top four mistakes committed by the rookie traders

The CFD trading profession is often considered a potentially life-changing one. Some of the traders … Read More about Top four mistakes committed by the rookie traders

Footer

TOPICS

SAVE MONEY
INVEST MONEY
REDUCE DEBT
MAKE MONEY
FAMILY & MONEY
TAXES
START A BUSINESS
RETIREMENT

THE FORTUNATE INVESTOR

ABOUT US
ADVERTISE
CONTACT US

The Fortunate Investor focuses on personal finance topics to build wealth. Topics include saving money, investing, managing debt, family and money, taxes, making money, college planning, starting a business, coupons and retirement.

SOCIAL MEDIA

FACEBOOK
TWITTER
PINTEREST
INSTAGRAM
YOUTUBE

Copyright © 2021 Fortunate Investor. All Rights Reserved. | Disclaimer & Disclosure | Privacy Policy | Terms of Service