Quick Tips for New and Experienced Investors
With the boom in legalization, investors new and old are recognizing the cannabis market as a potential money maker. Billions of dollars are going in and coming out of everything cannabis related – products, medication, research, recreational sale, and more. Still, the market remains unreliable. One day, stocks rise and there’s huge potential for profit, and the next it will drop. The thing about the market is, when the slightest bad news is reported, the whole industry’s stock will drop, not just an individual company. Therefore, when investing in the cannabis market– though you may invest in a particular company–you’re investing in the idea of federal legalization. Here are a few major points to consider before investing.
Check for Legitimacy
There are a couple of ways to check if the company you will be investing in lives up to their reputation. Basic information regarding a company’s stock filings and revenue figures are found on Securities Exchange Commission site, or simply on both Yahoo and Google finance pages. Make sure there is in fact money coming into the company.
With the rise of interest in the market comes the rise in scams. Some traders will buy stocks, publicize positive reviews to drive up the prices, and then buy out and reap the benefits. Websites like stockpromoters.com will show you if the stock is highly promoted, not falsely promoted. Likewise, be skeptical.
If a company looks too good to be true, it most likely is. Be wary of a company that releases daily or weekly press reports. Whereas, legitimate companies will issue a press release only when there is news. Plus, even the best companies have weaknesses. If you are investing in a company with only glowing reviews, be cautious, they might be hiding something.
Lastly, constantly check on the company. Call and email your investment. If the company never answers the phone, or never responds to your emails, it’s a bad sign. In addition, check to see if the management is selling their shares. If they are, it means management doesn’t believe in their own company and neither should you.
If you’re a newcomer, advisors suggest investing only 25% of your allotted money at first before diving in all the way. Review stocks listed on MJIC Marijuana Index for reviews and information before investing your money.
Legalization and Stock Fluctuation in the Cannabis Market
Cannabis is still illegal on the federal level. This means there remains a large risk for investing. At any given moment, the federal government could step in and shut down the whole program. While the Obama administration stepped back and let individual states create their own policies regarding marijuana, Trump’s administration has hinted it will not.
Vice President Mike Pence and press secretary Sean Spicer have made their beliefs of marijuana clear: prohibition all the way. Therefore, someone investing in the cannabis market should also keep an eye on the federal government’s acts regarding the legalization of the plant. Simply because marijuana is legal in a state, does not guarantee the safety of the investment.
The U.S. Drug Enforcement Administration (DEA) classifies marijuana as a Schedule I drug, the same category as LSD, ecstasy, and heroin. Because of this classification, cannabis companies are blocked from going nationwide and public until the drug is re-scheduled.
This means many of the stocks are over the counter (OTC) markets which are volatile with no liquidity. Moreover, many of these companies accept payment in cash, meaning there is no security. Investing in the cannabis market comes with many ups and downs and surprises. However, many still believe it’s the investment of a lifetime.
Marijuana Investment and Private Retreat
As a newcomer, investing in anything is incredibly daunting. Even for the experienced investor, the cannabis market is a risky business. One woman took it upon herself to create a company focused on advising anyone interested in the cannabis market. Khadijah Adams, founder and CEO of MIPR (Marijuana Investment and Private Retreat) Holdings, gives newcomers and oldcomers the chance to educate themselves on the industry. Before investing in anything, one must have extensive education on their investment. Keeping in mind the legitimacy of the company and the federal fluctuation of legalization, the market is a scary place. Adams eases investors into the market. With her professional legal cannabis consulting company, no investment is too daunting.