Cannabis law has been relaxing and expanding across the United States.
Investors are moving into this market with hopes of getting in on the bottom floor.
While there are benefits to getting into the cannabis market now, the risks shouldn’t be ignored.
Opportunity
Those who are making cannabis the focus of their business are striving to stay licensed and within the range of legal options.
Any investor interested in investing in marijuana stocks or in direct-selling businesses have a tremendous opportunity to ride the rise in CBD products, many of which are showing excellent health benefits.
However, you will need to do your homework. As with any other new industry, information about the product can swing from good to bad in a heartbeat.
One careless or poorly licensed producer can put a damper on the whole market.
If you choose to invest directly in a cannabis-based business, be ready to review their production processes and the expertise of their staff.
Because many investors are excited about the marijuana derivatives investment options, stocks may be elevated beyond a logical value. The time to get in on a good deal is before everyone knows it’s a great investment.
There will likely be a dip as prices and real values level out. Be ready to buy as you see prices drop.
Risk
One bad producer can quickly sour an entire market. While CBD aficionados may have a preferred brand or producer, the marijuana products market is suspect to the general public because of the bad press around THC products.
As CBD producers work to inform the general public of the benefits of non-euphoric features of CBD, the general populace continues to associate any and all marijuana derivatives with grim tales of “pot” use.
As you educate yourself on your investment strategy, be ready to educate others who question your choices.
Thoughts about the products to be gleaned from the marijuana plant are changing. CBD producers are gaining a name for oils and other products that are used to treat conditions such as anxiety, tremors, and even epilepsy.
These anecdotal tales need scientific backup before you put much money into marijuana stocks. Focus on the quality of the product generated by specific companies and be ready to review any major changes in staffing.
Factors such as long-term employee retention must be considered when considering the viability of a company, particularly as the market is so new and some producers must walk a careful line of documentation to stay on the right side of the law.
Real Threats
Punitive drug laws have gained in popularity over time. Many lifetime users of marijuana derivatives such as CBD are at risk of criminal charges.
If there is a sizable change in the federal law or if states reverse their plans on legalization in the future, your investment dollars may completely disappear.
The trend toward legalization continues, and CBD producers seem firmly placed to weather upcoming storms.
However, if you don’t have a sizable tolerance for risk, make marijuana stocks a very small portion of your portfolio.
While you are unlikely to be targeted as an investor in a substance that is newly made illegal, the stocks will obviously lose value. In addition, monies you have tied up the business may be inaccessible during any legal proceedings.
Final Thoughts
Marijuana legalization continues to expand across the country.
In addition to investments in marijuana stocks and businesses, carefully study producers in your region and across the country to make sure that the organizations you’re investing in are well-run businesses.
Any index opportunities in this industry will take a hard hit if bad press about any one marijuana derivatives producer makes the news.
