As the marijuana industry continues to grow, so does the number of companies looking to get in on the action. With more and more states legalizing cannabis, companies are now able to venture into the space and have a chance at becoming one of the dominant players. But with so many new companies coming in, it can be difficult for investors to know who will be successful.
While there are many factors that should be taken into account before investing in any company, a stock’s outlook is also important. Investing in cannabis stocks can be a risk if you aren’t familiar with the market, as it has been known to fluctuate significantly from week to week and even minute by minute. However, if you take time to look at all the factors involved, then it can actually be an excellent way to invest your money for long-term growth.
Why Invest in Cannabis Stocks?
Cannabis is a booming industry. It’s expected to grow to $47 billion in sales by 2020, according to projections by New Frontier Data, a cannabis research and consulting firm. These numbers are only expected to rise as the number of states that have legalized cannabis continues to rise. For example, more than half of the United States has legalized medical marijuana.
As a result, the medical marijuana market is currently worth about $9.6 billion and is expected to reach $33 billion by 2024. But why would investors want to put money into an industry that is still illegal on a federal level? Because even though the marijuana market is expected to grow rapidly, there are a few things that make it even more enticing for investors.
Institutional Investors and Exchange Traded Funds
There are a lot of benefits to investing in cannabis stocks, but perhaps one of the most significant is that the industry is getting a lot of attention from institutional investors. This is large because cannabis is now legal in a number of states, which has led to a huge increase in demand. This has prompted a lot of new companies to enter the scene and make an attempt at becoming successful, which is a good thing for investors as it creates competition.
The fact that there are now a lot of institutional investors that are interested in the cannabis industry is a huge deal. As more money enters the space, it can only help lead to even more innovation and growth. With more money coming into the industry there is also the potential to see the development of more sophisticated financial products. With more institutional investors entering the market, there is also a greater chance of cannabis stocks making their way onto major exchanges.
The Current State of the Legal Marijuana Market
The legalization of cannabis for recreational use in some states has led to a surge in demand as people now have access to a legal way to consume the drug. This has led to a massive increase in the price of marijuana and is expected to continue to do so, as many people are investing in the industry to make money.
Another thing investors should take note of when it comes to the current state of the legal marijuana market is that spending on it is expected to grow significantly in the future. This is largely due to the fact that many people are now investing in the industry because it is a profitable way of making money.
This means that there is a greater chance that more people will begin consuming cannabis because it’s legal. This will lead to even greater spending in the industry and is expected to continue to be the case in the future.
Recent Developments in the Legal Marijuana Market
For those interested in investing in cannabis stocks, it’s important to keep an eye on what is happening in the industry. As we talked about above, the market is expected to grow significantly in the future, and the reason for that is largely due to the fact that more states are now legalizing cannabis.
This means that a lot more people will be consuming the drug and will thus have a greater need for it, which will drive up demand even more. With more states now legalizing the drug, we could also see the legalization of cannabis for recreational use on a federal level.
This would be a significant development for the industry as it would mean that the drug would be treated like alcohol, which would greatly expand the market.
The United States Cannabis Market is Still Evolving
One thing that should be taken into account when investing in cannabis stocks is that the market itself is still evolving and will continue to do so over the next few years. This is largely due to the fact that the federal government has not yet decided how it will approach the legalization of cannabis.
What we do know is that the more states that legalize, the greater the demand for the drug will be. What remains to be seen is how the federal government will approach this. This is one of the key factors that investors should keep in mind when looking at the market.
Factors That Could Affect a Stock’s Outlook
There are a number of factors that investors should keep in mind when it comes to the outlook of cannabis stock. One of the most important is the company’s financial health. This is primarily due to the fact that if a company cannot manage its finances then it could potentially have a difficult time continuing to operate. This could lead to the company shutting down.
Another factor that investors should look at when gauging a cannabis stock’s outlook is its recent performance. This is primarily due to the fact that if the stock has recently decreased in value then it likely won’t be able to continue doing so. The final factor that investors should keep in mind when looking at a cannabis stock’s outlook is how the company is performing in the market.
Pros and Cons of Investing In Cannabis Stocks
Investing in cannabis stocks is a very risky endeavor for those who aren’t familiar with the market and its volatility. The cannabis industry is expected to continue to grow, and this means that the value of the stocks could go down as well.
However, if you wait long enough, then the market will likely be ready for a new set of investors. This means that if you get in at the right time, then you could potentially make a lot of money. While it might be a good idea to invest in cannabis stocks, it’s important to keep in mind that the market is still evolving and could change significantly.
