Investing in Cannabis Stock
Since Canada legalized recreational cannabis in 2018, there has been an abundance of excitement around investing in cannabis stocks. Cannabis stocks are companies directly involved in the production, processing, and distribution of cannabis-derived products. Some weed stocks have had tremendous price movements which cause many investors to believe they can get rich overnight. Since the cannabis industry is fairly new, it’s important to remember to be cautious when selecting the right pot stocks for you.
If you’re considering investing in cannabis stocks, here are some things to consider:
What to look for when investing in Cannabis Stock
1. Understand the various types of cannabis products.
The weed industry is broadly divided into two markets—medical and recreational cannabis. As their names suggest, both have applications in different industries and cater to different markets. Medical cannabis stocks represent companies that are involved in research and development (R&D) for the treatment of certain health conditions, while recreational cannabis companies cater to products that don’t serve a medical purpose. Instead, the products are used to seek the high that comes with smoking, consuming, or drinking cannabis. Although Farmer Jane is not a company in the stock market, many of Farmer Jane’s cannabis suppliers are in the recreational cannabis stock market. To name a few, there is Hexo, Canopy Growth, and the Cronos Group.
2. Analyzing the cannabis companies management team
When it comes to buying stocks in a public company, analyzing the companies management team is integral. The management team can be seen as the backbone of any successful company, as they are the ones making the strategic decisions and setting the companies vision and direction. When gauging the strength of the companies management team, here are some things to look for:
- How long has the management team been with the cannabis company? Or, how committed are the individuals in management to the company?
- How many years of experience in management does each of them have?
- What are their qualifications and do they have any notable success in past management-related projects?
- Are the founders of the company still a part of the management team, or at least directly involved with the company?
3. Understand you’re level of risk you want to take on
There’s no such thing as a risk-free investment – in and out of cannabis stocks. Some investments can be considered “safer” than others, but there’s always a certain level of risk associated with investing.
We can’t see the future, but we believe the cannabis industry represents a strong opportunity for growth.
If you are interested in investing in cannabis stocks here are some links to some stocks that are worth looking into.