Should Investors Buy Medical Marijuana Stocks?

marijuana leaves

In recent years, the world has seen widespread legalizations of Marijuana for both medicinal as well as recreational use. With over 30 countries around the world legalizing the substance, it is not surprising to see a number of businesses sprouting up.

According to estimates, the marijuana industry could expand to be worth over $150 billion 10 years down the line.

Thus, many speculate that this would be a good time to invest in what could turn out to be an extremely lucrative market. However, before you start moving money around, gather some more information so that you don’t end up getting burned.

The 3 Kinds of Marijuana stocks

Although since its legalization, the marijuana market has attracted loads of attention, one thing to note is that marijuana stocks are not all the same.

All in all, there are 3 categories of stocks: growers, biotechs and supply providers.

Growers typically have tiny market caps on account of the fact that they simply cultivate marijuana and sell to consumers.

Biotechs, on the other hand, are more profitable since they are pharmaceuticals that develop and market drugs that contain cannabinoid. Although such stocks tend to have a higher market cap, such as that of the UK based GW Pharma, the main issue is that there is always the chance that clinical trials may fail and the company loses money.

Lastly are those stocks that aid in the plantation processes, such as providing fertilizers and lighting systems. While this is a low risk profile, such suppliers struggle to compete with major retailers.

Location, Location, Location

Another thing one must keep in mind while thinking of investing in stocks is the location.

Look into areas that are lenient with licensing to stock companies. This eliminates the restrictions placed on companies and allows them to operate without any hindrances.

One of the companies to be mindful of would be Future Farm Technologies which operates out of Florida.

We must be sure to invest in those locations that do not place a high limit on the number of licenses given out to growers and dispensaries. Florida’s demographics is well suited for medical marijuana and thus some project will be worth more than 1.6 billion by the year 2020.  It is home to 25 dispensaries of which 7 are owned by Midori Med in North Miami, FL.

Furthermore, if you meet the qualifications for medical marijuana use, head on over to a dispensary near you and get your marijuana card.