Need to Know: Investing in Cannabis Stocks

The Beginner’s Guide to Cannabis Investing 

We reached out to our friend Brent Williams of Highwater Financial to help us navigate through what has been a difficult decision to make… when, what, and who do you invest your money in when it comes to Cannabis. Currently Cannabis is still federally illegal in the United States. Dozens of states now have medical Cannabis and a dozen now have have legal adult use Cannabis and sales. It’s only a matter of time that Cannabis is decriminalized and hopefully descheduled from the controlled substances list. So now you need to know about investing in Cannabis stocks.

Here at Cannapolitan, we get pr releases from dozens of companies in Canada who are actively looking for investors to invest in their huge Cannabis companies. But is that a good move? Having a good guide can at least pave the road to a reasonably smart decision moving forward. Here are some valuable tips and information on how to best invest in the future of Cannabis.

Perhaps Miss Canada (Alyssa Boston) knows something we don’t know? Miss Universe pagent, 2019.

The following written by: Brent Williams

The push to legalize Cannabis on the Federal level has gained significant momentum in recent months. The green wave of adult use Cannabis legalization on election day, the passing of The MORE Act in the House of Representatives, and the UN reclassifying Cannabis as a less dangerous drug. There’s a renewed interest on the financial side of the Cannabis market. Which is evident in the significant increase of capital from investors since January 2021 already reaching a 170% increase of invested dollars against the whole of 2020.

As the Cannabis industry continues to fortify opportunities, it can be daunting to learn this emerging market’s nuances. I’m here to help you better understand the landscape.

Is now the time for me to invest in Cannabis?

As with any type of investment there is always a risk of financial loss, which is dependent on a variety of factors. Despite significant progress in the previous months the Cannabis industry is still illegal on a Federal level. Its infancy leads to less stability.  That being said, in Highwater Financial’s opinion, the best time to invest in the Cannabis industry is before legalization at the Federal level. Existing investments should be primed for exponential growth when the New York Stock Exchange and NASDAQ up-lists these stocks upon legalization. Professional and large institutional investors are leading with this strategy, as they have placed more than $560 million in the Cannabis industry since January 1^st, 2021.

How do I start investing in Cannabis?

If you want to start investing in the Cannabis market, you have two options. The first and most common option is to purchase Canadian operators’ stock that is listed on the NYSE / NASDAQ. This isn’t ideal, as Canadian companies tend to be less profitable due to a smaller market size when weighed against nearly all US options. A more strategic approach is to work with a brokerage that trades over the counter (OTC) stocks. You’ll find additional opportunities in this smaller, less regulated market with American operators that will eventually move to the larger exchanges as Federal legalization is achieved. Many mainstream brokerages offer OTC trading. Many do not. We recommend StockBrokers.com as a solid resource to compare brokerage services.

How do I make informed investments?

Information is key to making wise investments, but it can be a little tricker to find intel on the Cannabis market. Mainstream news sources (Morningstar, Bloomberg, CNBC etc.) don’t provide the Cannabis research and coverage that DIY investors need to analyze the industry. Investors will need to seek out specialized resources with a pulse on the industry. The good news is there’s no shortage of information. Of course, we are partial to The Highwater Chronicle. Owned by an investment bank and brokerage firm that publishes a Cannabis-focused investing newsletter every morning at 4:00 am EST.  This covers the most important news from the previous day and explains the impact going forward. Additional resources include New Cannabis Ventures, which also includes features with industry executives and  theMarijuanaindex.com – focused on evaluating industry performance.

How much capital do I need to start investing? 

The good news is there isn’t a significant amount of capital that is needed to begin investing in the Cannabis market. Most brokerage platforms require a minimum of $2,000 to deposit to get started. If an investor has less than $5,000 to commit when starting, an attractive investment option is a Cannabis exchange traded fund (ETF). ETFs are a professionally managed group of Cannabis/ Cannabis-related stocks. If the investment sum is larger than $5,000, it often is more advantageous to invest directly in a company.

Web links Updated on 5/10/2023