Marijuana, as the term implies, is seen as a psychoactive drug from the cannabis plant. The trade of marijuana in the stock market has proven to be a very liquid venture. The plant is basically used for medical and recreational purposes.
Total trade investment on marijuana based on research is over 9 billion dollars in 2018 with an expectation of 23 billion dollars in 2020. With its legalization, the trade of marijuana is as vast as that of bitcoin and other instruments in the Forex market. In the stock market, investing in marijuana is seen as buying part of the growing business which includes plants and sales without the fear of enormous risks associated with losing half of its value at a glance.
MARIJUANA STOCK LISTINGS
CANADA AND UNITED STATES LISTED
The trade of marijuana has developed a lot of uncertainties in the regulatory framework. These regulatory reservations have not only shown a great impact on marijuana business but have also contributed to a smaller amount listings in the United States. Due to this result, a lot of American companies have relocated to a hospitable environment for their investments.
OTC Market and the NYSE/NASDAQ
NYSE/NASDAQ both known as top American Stock exchanges got their first basic cannabis company listed in 2018. Aside from these, other exchanges who trade venture into the trade of marijuana still invest in the OTC markets. This singular act increases risk and suspicions.
The trade of marijuana and cannabis investment is not performed by growers and retailers alone. In the stock market, there are a lot of companies that deliver post services to industries and other traders who make use of marijuana for drug production in the medical field. Examples of
PROBLEMS ASSOCIATED WITH INVESTING MARIJUANA STOCK
TRADING MARIJUANA OVER THE COUNTER
The trade and investment of marijuana have been legalized in some U.S. states and in most part of Canada. Most companies are authorized to trade the plant for medical purposes and recreational activities. However, trading marijuana in the stock market is yet to be legal at the federal level with respect to schedule 1 drug by the DEA. This authorization has made it difficult for other companies to get listed in the stock exchange regulations be it Nasdaq or NYSE.
In contrast, all companies who can’t get enlisted seek for an alternative method of investing marijuana in the stock market hence, the over the counter market. This action made all public companies in the frame of cannabis investment less secured than those licensed under Nasdaq or NYSE.
There are a lot of challenges encountered by companies that trade over the counter. Firstly, these companies are disregarded and are not taken seriously when compared to fully licensed ones. Secondly, there is a great degree of liberty when it comes to the quality of companies that will trade on them.
HOW TO IDENTIFY BAD WEED (MARIJUANA) FROM THE STOCK MARKET
The identification and selection of good marijuana weed in the stock market can be a very difficult task. Most retail traders and investors go through the tedious process of going through a lot of files and company documents with the aim of hashing out the good, bad and ugly. In addition, most traders and investors find it hard to get their hand on the resources need to get proper information on the company. Outlined below are some tips used to identify bad weeds and good ones.
- Invest in Exchange Traded Funds like horizons marijuana life science index ETF. The trade of these instruments helps investors make better choices in the marijuana stock market. When trading ETFs, the stocks available have already undergone analysis by special analysts. The stock analysts make sure that the weed is safe and original before including the companies in the ETFs.
- Another way of investing in the right marijuana is frequenting with investment advisers and reliable stock pickers.
EFFECTIVE STEPS TO MARIJUANA STOCK INVESTMENT
DO AN EFFECTIVE RESEARCH ON THE COMPANY
As an investor, your major priority is to firstly, engage in a proper research of the company you want to invest in. The basic feature of the company should be complete. The company in question should be fully regulated to avoid fraud or sells of bad marijuana. In addition, an adequate follow up should be performed by reading the news release on the company’s site. Examples of companies include Canopy Growth Corp, Scotts Miracle-Gro Co, and GW Pharmaceutical Plc.
KNOW THE AMOUNT TO INVEST
In the stock market, there is a general rule. Never trade the stock market with what you can’t afford to lose. Investing in marijuana stock is dynamic in nature, very volatile, unpredictable and full with ups and downs. Every investment comes with a certain percentage of losses. Start small while aiming high.
DETERMINE YOUR TRADING TIMELINE
Most traders and investors fail because to fail to plan. Those that plan fail because they don’t stick to the developed plan. When trading marijuana stock, every effort should be placed on knowing the right time to buy or sell. Plan in advance and set buying and selling guidelines without allowing fear and greed to take place in the trade scenario.
INVEST WITH A RELIABLE BROKER
By the time you have gone through the process of selection and planning, the next route leads to subscribing with a stockbroker. They are a lot of available brokers for the sale and purchase of marijuana. There are brick and mortar brokers in conjunction with online brokers. The important aspect is to trade with reliable, transparent and regulated ones. A research won’t be overrated in this aspect.
BUY AND SELL THE STOCK
The process of purchase is done in two different ways. Using a market order or using a limit order. A market order gives Forex traders the ability to purchase marijuana at the current market price. A limit order buys Crypto currencies only when the price attains the limit price. Any method of purchase can be accepted. Secondly, you can also sell the stock using a limit order or a market order.
Hence, investing in marijuana stock is a venture that promises a lot of profits and returns when done in the right way. Traders should engage the trade with a mindset of trading around the core. Always seek to take advantage of the volatility that occurs in the stock market thereby increasing profits.
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