Cannabis stocks were crashing down from mid 2014 till the end of 2015 but now since the beginning of the year they appear to be slowly rallying up again. The cannabis industry is currently expanding with a growing number of US states legalizing medical or recreational marijuana. So things are looking good right now, there is a lot of optimism in the industry and expectations are high. There is a general feeling of now is the right time to invest in cannabis.
So should I invest in cannabis stocks right now? Not so fast cowboy! Investing in over the counter (OTC) traded cannabis stocks may not be the best idea. If you are dying to invest your hard earned pesos in a cannabis business you should probably invest it in a cannabis startup you really believe in that is not yet publicly traded. There are also some publicly traded companys that are long established but have only recently ventured out in the cannabis industry. Those might be better options because the reality is the majority of the OTC traded stocks are very speculative. There is hardly any regulation so even if they don’t appear to be penny stocks, chances are they might end up becoming pennystocks very soon. The valuations for some of these companys are often based on nothing more than faith and good intentions. There is a lot of hype in this industry right now and often times with absolutely nothing behind it.
That of course doesn’t mean it is all bad and you can’t turn a profit. If you are a business savy investor and you found something you really believe in you could definitly succeed. Just make sure you unterstand exactly what you are investing in, before doing so. You should keep in mind that cannabis is still federally illegal in the US and a lot of the hot cannabis startups are US based. This is also the reason why US banks don’t want anything to do with marijuana businesses that directly handle the psychoactive plant matter.
We would recommend not to invest in those companys that have direct marijuana contact just yet. In any case, do your due dilligence before pulling the trigger or all your money can go up in smoke!