The marijuana legalization movement has exploded in the United States. It started with medicinal marijuana (MMJ). Now things are moving towards full legalization for recreational use and that is opening up a whole new potential industry. Investors should start to take notice of marijuana stocks.
State by state, the movement spreads. When we first wrote this article a few years ago, the map only had a few states in green.
Toady, most of the United States allows some form of legal cannabis. It’s just a matter of time before it is be legalized for recreational use on a federal level. The states in green below currently allow some form on cannabis use (and the "D" means decriminalized):
PhotoCredit: WikiMedia Commons
The morality of using cannabis aside, it’s obvious that there is opportunity in this expanding market. But the MMJ industry still struggles with some unique problems. For example, most large financial institutions won’t work with the companies that sell medical marijuana.
Despite the setbacks, cannabis is set to become a major part of our economy. There is a lot of potential for investors and entrepreneurs. There are already several marijuana stocks out there for investors to buy.
Marijuana is a Growing Industry
Some are comparing it to the California Gold Rush back in 1849. That is a fair analogy. Like the gold rush, there is money to be made. An entire industry has grown up around legal weed. And it’s likely that this is just the beginning.
Figures are murky, so it’s tough to accurately figure the total potential of the pot industry. But it is getting larger every year. According to Forbes, MMJ was worth approximately $9.2 billion in 2017. Some estimate it will be worth around $47 billion a year by 2027. That's a huge growing trend!
There are many people who are making money from legal cannabis. MMJ has created jobs that didn’t exist just a few years ago. Some of these opportunities are limited to people living in states with relaxed pot laws. Others are available to all of us.
How can investors and entrepreneurs take advantage of this trend? Let’s look at 9 market and business opportunities available for those who choose to enter the legitimate marijuana market, from investing in marijuana stocks to other opportunities.
Watching The Pot Stocks
It's important to note that pot stocks are some of the most volatile investments out there currently. Given that the industry is small and growing, Federal law is still murky, and they are small cap stock in general, many of these stocks aren't likely the best investments.
Similar to invest in penny stocks in general, there is high risk here. However, there is also the potential for high reward.
Given the odd business climate in the United States, many pot stocks are located in Canada and trade on the exchange there.There are a few stocks that trade on the NASDAQ or NSYE in the US, and that number is tarting to grow.
Here are some major focuses for investors.
1. Grower
It all starts with the seeds and plants. Growing marijuana is a science. Individuals can start with just few plants as allowed by state law. The larger organizations employ master growers, hydroponics farmers, and botanists. Think of this like a professional agriculture operation - if legalization occurs, mainstream farmers may switch to this crop as well.
In fact, the University of Mississippi has restarted it's "legal" growing operation to fund studies for various government departments all over the United States. This is a good sign for other marijuana growers.
2. Dispensary
The dispensaries take on lots of risk. They are the pharmacies that sell medical marijuana. However, they have doors to kick down, and the Federal government does it regularly. But that hasn’t stopped them from spreading all over cities in California, Arizona, Colorado, and other states.
3. Delivery Service
Delivery drivers will bring cannabis right to your door. A great opportunity for those looking to get into the weed business with minimal investment.
If you've been following the news later, Uber, Google, Amazon, and more are getting into the specialty delivery space. You can even do side hustles as a delivery driver with companies like Post Mates. Adding in marijuana will only grow this area.
4. Contractor
Electricians, construction crews, and irrigation experts are all needed to build large-scale grow operations. Many cities in areas where medical marijuana is legal already have hydroponic shops that have experts in these areas.
In fact, several investment firms have focused specifically on this area, including GreenGro Technologies. Just building the equipment and spaces required in the industry can be lucrative.
5. Trimmer & Bud Tender
Trimmers clean up the buds and make them pretty before sale. This seemingly boring job can pay very well. Bud tenders work at dispensaries, ringing up customers and providing them with advice on different strains. Think of it as the sommelier of marijuana.
6. Device Maker
A large sub-market. There are a variety of device makers making and selling grinders, glass smoking devices, smoking paraphernalia etc. Vaporizers are a very popular area of this market. Many smoke shops are already selling a variety of devices for tobacco use that are used for marijuana.
In fact, Seattle company mCig Inc. is an herbal cigarette and vaporizer maker that has explicitly stated it's focusing on the marijuana market.
7. Online Entrepreneur
Weedmaps is a great example of how legal weed gave someone the chance to create an entirely new business. And that’s just one example. Countless blogs, weed-themed stores, review sites, and other businesses make money for online entrepreneurs.
8. Venture Capitalist
As cannabis goes mainstream, the big money moves in. Forbes reports that venture capitalists are investing cash in the industry. Leafly is one example. The cannabis review and dispensary website is a venture capitalist backed MMJ business.
9. Stock Investor
Not everyone is cut out for the weed business. And not all of us have deep pockets like a venture capitalist. But you can still profit from cannabis. Investors can buy marijuana stocks.
Also, be careful because investing in marijuana stocks can get you fired in some cases.
List Of Pot Stocks And What They Do
If you're looking for marijuana stocks or companies that focus on related industries, here's a short list of some of the major companies and what they are focused on.
Some of these companies are large conglomerates that have a small focus on marijuana, while others are exclusively focused in the space.
Company Name | Ticker Symbol | Focus |
|---|---|---|
Canopy Growth Corp. | CGC | Production and marketing of both recreational and medical marijuana |
Aurora Cannabis Inc. | OTC: ACBFF | Production and marketing of both recreational and medical marijuana |
Cronos Group | CRON | Production and marketing of medical marijuana with a large international focus |
Terra Tech Corp. | CRON | Agricultural and hydroponic company that does some marijuana production |
General Cannabis Corp. | OTC: CANN | Provides ancillary services to producers and businesses in the marijuana industry |
Innovative Industrial Properties Inc. | IIPR | Medical marijuana real estate investment trust (REIT) |
mCig Inc. | MCIG | Holding company that invests in a wide range of marijuana related activities |
GrowGeneration Corp. | GRWG | Specialty store chain that focuses on hydroponics and organic growing |
Solis Tek | SLTK | Indoor lighting equipment company with a focus on the cannabis industry |
Kush Bottles | KSHB | Packing solutions and supplies for the cannabis industry |
Scotts Miracle Gro Company | SMG | A traditional agriculture company making a big push into providing cannabis growing supplies |
Final Thoughts
Legal cannabis presents unique and interesting opportunities for investors and entrepreneurs. Once it is legalized on a federal level, it will become a major part of the US economy. There is money to be made in this emerging industry.
What are your thoughts on investing in marijuana stocks or the marijuana industry as a whole?
Jenny @ Frugal Guru Guide says
I wouldn’t quite say that it’s a matter of time. I’m in the wait-and-see boat for this one. What causes more harm, making marijuana illegal or legalizing it? In the Netherlands, legalization caused some serious issues and drastically increased to usage among people under 18 and marijuana-related property crimes. There is also VERY good evidence now of marijuana causing schizophrenia in the genetically predisposed (an association was long known, but many thought that schizophrenics were just self-treating–it’s now known that this is NOT the case). If that happens here, the sentiment supporting universal legalization will evaporate rapidly. That said, I hope the Fed steps back and lets these states be test cases for the rest of the country. It would be good to know what the least-bad choice would be.
I wouldn’t invest in it right now, though, even if I weren’t opposed to it on the same grounds that I’m opposed to investing in tobacco. The feds can swoop in at any moment and seize anything.
Mario Favela says
The trend is obviously moving towards decriminalization…I do agree that the feds may flex their muscles in the meantime.
But once the federal government figures out they can make more money off taxing weed than they can off of perpetuating the “war on drugs”….then game over.
jody says
I never thought about this being something to invest in. I think you’re right. It would be a good thing to invest in. Thanks for the list of places to buy.
randyfulgham says
i would invest in this if i had extra money–but when your disability its hard to save money..nice post!!
Sam says
Getting in on the marijuana industry now is like getting in on the dotcom industry in the early 2000’s: high risk high reward. All too often people wait until everyone else is making money and then decide to start educating themselves. By then its too late.
You don’t have to start investing now, but you should definitely start educating yourself so when it comes time to buy you know what to do rather than trying to listen to 100 people tell you how to invest.
If you want to monitor the daily trading of stocks check out the marijuana index
http://marijuanaindex.org
Don’t let this amazing opportunity pass you by. And don’t just jump in because of the hype.
Ryan says
Yes, now is the perfect time to invest in marijuana.
The index has bottomed and there is slow accumulation again. The hype has temporarily washed away. Come 2016 there will be several states with legalization ballots again, including California, the world’s 7th largest economy. The possibility stands that 1/5 of the US will adopt legal marijuana stance by the end of those 2016 ballots. It will undoubtedly be a topic of debate for the presidential election as well. Considering several polls have indicated that popular support has now tipped in national favor of legalization, it will be a delicate issue in the campaign.
What’s important is that one doesn’t blindly put money into a pot penny stock. It’s almost inevitable that most of them will rise again regardless but there are some that are far superior to others in regards to share structure, financing, operations, and etc. If one does the research, I believe he/she will be rewarded handsomely come 2016.