Getting In On The Green Rush; How To Invest In Legal Marijuana
Marijuana is now legal in 26 states, and the drug is getting great PR. The visual of the high school stoner with red eyes and munchies is no longer the face of pot. It’s becoming as acceptable as alcohol, across age groups and social classes for medicinal and recreational use.
Marijuana is now legal in 26 states and it is getting great PR. The visual of the high school stoner with red eyes and munchies is no longer the face of cannabis.
Thumbnail credit huffingtonpost.com
From an investment standpoint, there is a lot to be gained here. You have a drug that is relatively inexpensive to grow, is not physically addictive and has no risk of overdose. Arcview research estimates that legal marijuana sales in the US should reach $22 Billion by 2021, with an estimated growth of 27% annually.
The current state of Marijuana in the US is tricky. While the drug is legal in some 26 states at the state level, it is federally considered a Schedule 1 substance. You cannot cross state lines, and it is difficult for a distributor to open a bank account or rent retail space. A company that sells pot, whether it be medicinal or recreational, cannot go public on any of the US exchanges. So how can an investor get in on the green rush?
One way is to buy foreign securities. Though US based Marijuana distributors are not able to go public on US markets, they are able to sell their companies to companies where the drug is federally legal.
Another option is to buy companies that provide research or insurance in the Cannabis space. For example OWC Pharmaceutical Research Company (OTCMKTS:OWCP) does research on medicinal marijuana.
If you don’t want to be burdened with the risk of federal government interference, Cannabidiol, best known as CBD, is the non-intoxicating compound of the Marijuana plant. CBD can be consumed, or used as a cream, and has been found to have numerous benefits, including anti-ageing properties, preventing the growth of bacteria, slowing inflammation, reducing blood sugar levels, controlling seizures, and reducing risks of nerve damage. Because CBD is federally legal, there are no research restrictions, and it doesn’t have the same banking or shipment issues that are typically associated with the federally illegal THC products. There are a number of public companies in this space available for investment.
There is money to be made in the marijuana industry, but individuals need to be very careful when considering these investments. Other than comparing it to alcohol prohibition, there is no real model to follow, or past performance to analyze. There is no one we can turn to that has been in the industry for decades and can pass their experience and knowledge onto us.