Emerging industries often create great opportunities for investors. If you get in early, you can see the value of your stock skyrocket if things take off.
Currently, marijuana is one of those industries. Across the US, many states have laws permitting marijuana for medical or recreational use, and others are considering jumping on board.
Now, burgeoning businesses are looking for investors, and they could be excellent opportunities. However, they come with risks, too.
If you are wondering whether cheap marijuana stocks are worth the investment, here’s what you need to know.
Most Cheap Marijuana Stocks Aren’t with US Companies
In the US, marijuana is still illegal at the federal level. This means many marijuana businesses are forming in nations that are friendlier towards the product, like Canada.
Now, this isn’t necessarily an issue, as purchasing these cheap marijuana stocks is still very easy. Plus, since the companies aren’t in the US, they may face less risk from a legality standpoint than an American company would shoulder today.
However, like any burgeoning industry, some marijuana companies amount to nothing but scams. They are businesses looking to take advantage of the growth potential and aren’t necessarily reputable. While not all cheap marijuana stocks connect to scam companies, some of them may. This means you need to take care about where you send your money.
Changes to Marijuana Laws and Enforcement Play a Role
Even if the company headquarters in a marijuana-friendly country, that doesn’t mean the laws of other nations don’t impact them. Many marijuana businesses want to expand into the US market, if they haven’t already, and American laws play a factor in those decisions.
For example, while the federal government is largely hands-off when it comes to operations in states that have legal marijuana, they could increase their involvement at any time. This means growers, distributors, and retailers could feel the impact of the federal government’s choices, even if they aren’t solely operating in the US.
In contrast, more states are considering varying levels of legalization. This creates new markets, giving marijuana companies a chance to expand and reach new customers. Ultimately, this may allow cheap marijuana stocks to gain value as they take advantage of a new marketplace.
Should You Buy Cheap Marijuana Stocks?
Like any investment, trading in stocks is no guaranteed to be a winner. There is a significant amount of risk in this industry, so investing in cheap marijuana stocks might not suit those with a low risk tolerance. Additionally, laws surrounding the industry change regularly, and those can affect performance. Add to that the fact that scam businesses exist, and it’s clear that caution is necessary.
However, there is potential for growth, so cheap marijuana stocks can be a good option. Before you invest, research the company and review any recent news that may impact the industry. That way you can spot potential issues that may negatively affect the value of your stock.
Have you invested in marijuana stocks? Tell us about it in the comments below.
Want more advice on investing? Give these articles a try:
- Investing in Cause and Effect: Stock Price Behaviors Every Trader Should Understand
- 4 Common Investing Mistakes Women Make (And How to Avoid Them)
- Investing in Gold Bullion for Beginners
I wouldn’t invest in marijuana stocks the same way I won’t invest in gun stocks: I don’t think it’s unethical. I feel like some of the people who get marijuana for “medical purposes” use it for other purposes.