Now that the price of bitcoin and its cousins have recently been cut in half from their feverish peaks of last December, marijuana stocks have become the focus of many speculative investor’s economic fountain of youth (Who knows? Ponce De Leon may have taken a toke or two!)
And it’s not hard to see why. It seems like every day another state is reducing restrictions or legalizing some form of pot. Some smaller companies that have gone public have seem parabolic rises in their stocks price.
What are some of the things to consider when pondering an investment in this young industry?
Our citizens want marijuana legalized
Over the last 20 years, polls have shown a definite trend to increased desire to have marijuana legalized for recreation use, with medical use surveys showing overwhelming support.
Ancillary markets such as oils and extracts can be more lucrative
Companies that can produce cannabis oils and extracts can generate higher profits that those who are just selling the “weed.”
The cure for high prices is high prices.
As prices and profits skyrocket, inevitable competition can come in and produce supplies that can drive down prices and profits.
It’s still illegal at the Federal level.
While states are loosening restrictions, the Feds still consider this a Schedule I drug, therefore illegal for banks and other financial institutions to provide financial services to.
There can be a pot of gold at the end of this rainbow, but hurdles do remain for this industry.
For a no-cost, no-obligation phone consultation on this and other financial topics, please call me at (610) 999-3599.
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