While people have been using Cannabis since centuries, it is only the last decade that revolutionized it. Its therapeutic potential to treat various ailments is remarkable.
The rise in the legalization of Cannabis in various countries is one of the key factors driving its market growth. Today, even as nations battle the coronavirus pandemic, the legal sales of Cannabis continue to rise.
What is Cannabis?
Cannabis is a drug derived from hemp plants such as Cannabis Sativa. It contains two primary active compounds which are as follows:
- Tetrahydrocannabinol (THC), the principal psychoactive component
- Cannabidiol (CBD), the non-psychoactive component
Both these compounds interact with your endocannabinoid system, but their effects differ significantly.Tens of millions of people worldwide consume Cannabis regularly for recreational or medicinal purposes. This widespread and persistent consumption of this substance has created an enormous demand.
Why invest in the Cannabis industry?
The Cannabis industry was estimated to be $13.9 billion in 2019. Today, many cannabis companies are announcing their entry into national and international stock exchanges. As per executives and analysts, Cannabis stocks indeed have the potential for long-term growth.
Here are a few reasons why you should consider investing in this remarkable industry.
- Legalization of Cannabis:
The world attitude towards Cannabis is shifting. It’s only a matter of time before even the governments worldwide realize that legalizing Cannabis would be the right thing to do. Medical Cannabis is already legal in a lot of countries. You can google Cannabis store to get your hands on & try something new.
- Medical benefits:
With an increasing number of people realizing its therapeutic potential to treat various ailments, its demand has skyrocketed. Moreover, it provides a natural alternative to synthetic medication.
- Creation of jobs:
According to a 2019 study, Cannabis directly employs about 211,000 full-time workers in the United States, thereby known as ‘America’s hidden job boom.’ In addition to the manufacturers, cultivators, deliverers, and dispensaries, this market created jobs for accountants and tax experts.
- Growing public support:
Millennials, above all, are in favor of the legalization of Cannabis. This is placing pressure on the legislators to back legalization laws, especially in the United States, where at least two-thirds of Americans support it.
- Market versatility:
One of the keys to the growth of any market is versatility. With an increasing number of people adopting Cannabis products, it has popped up across a plethora of industries. From cosmetics to the food industry, it is the new buzzword- be it Cannabis-infused edibles, beverages, CBD bath bombs, or skincare products.
- Greater clarity in the industry:
In the past, Cannabis laws were very contradicting and ambiguous at both local and state levels. Now, with increasing acceptance towards this substance, there is undoubtedly greater clarity. Likely, the legislation will finally allow banks to get involved in this sector shortly. It would prove to be a great victory as it would, in turn, strengthen the Cannabis industry.
Now that you know how rapidly this industry is progressing let’s discuss how you can invest in Cannabis stocks.
How you can invest in the booming Cannabis industry:
Firstly, it is essential to understand that there are three types of Cannabis companies.
● Growers:
This includes companies that cultivate Cannabis outdoors, indoors, or in a greenhouse facility.
● Biotechs with a Cannabis focus:
This category includes businesses that develop prescription drugs based on the ingredients found in Cannabis.
● Ancillary product and service-providers:
This category includes organizations that provide products and services to the Cannabis industry. It includes hydroponics systems, lighting, distribution, packaging, and consulting.
Investing in Cannabis stocks is just like any other kind of stock. If you’re a beginner, fret not! Here are a few quick tips to help you.
- Scrutinize the company’s top management i.e., their track records and impression.
- Analyze the competitive advantages the company has over its competitors and its strategy for growth & development.
- Identify if the company is profitable. However, many Cannabis companies might still be in the nascent stage. In such cases, you could search how they intend to reach the level of profitability instead.
What company should you invest in?
Cannabis stocks undoubtedly provide a high-risk and high-reward proposition. You should be aware that reducing the risks involved through diversification across numerous Cannabis stocks is possible.
Investing in companies that showcase that they can meet an uptick in Cannabis demand would be advisable. Scalability and quality supply chain are two aspects you should look at as an investor.
Final thoughts:
Cannabis is undoubtedly one of the next great global industries. With a significant amount of innovation and lots of room for growth, investing in this industry would surely be a wise choice. It would be advisable for beginners to start with a relatively small position and then progress to buy more shares.
