Over and above the last few years, the legal cannabis landscape has changed dramatically. More states across the U.S. have moved to legalize recreational and medical marijuana. Canada legalized recreational marijuana use on Jun. 20, 2018 and Mexico seems to be following in step. On Nov. 8, 2018, Mexico’s entering government submitted a bill to create a medical marijuana industry and allow for recreational use of the drug. With signs calling to eventual U.S. legalization, North America is poised to become a global leader in the emerging marijuana industry. That bustle may still be budding, but some estimates already value it at over $150 billion per year. Much of the growth in the cannabis assiduity can be credited to the influx of companies involved in the production, distribution, and study of legal cannabis.
Almost overnight, investors take the opportunity to place their assets in a number of legal marijuana businesses. And yet, despite all of the hype, there are still points for investors to be cautious moving forward. In this article, we break down four questions that you should ask formerly investing in the legal cannabis industry.
When Will Marijuana Be Legalized in the U.S.?
Recreational marijuana is legal in 10 dignifies in the U.S., while 33 more have passed bills to allow for regulated medicinal use. States on the west coast may give birth to led the charge, but there are now regions throughout the country where individuals can grow and purchase pot legally. Nonetheless, the prospect of a subject effort to legalize marijuana remains elusive, even in spite of the fact that more and more individual magnificences are moving in that direction. Investors should keep in mind that federal legalization is by no means guaranteed, and that, in the meantime, comrades face highly disparate sets of regulations depending upon where in the country they operate.
How Will Marijuana Be Taxed?
A serious point of contention in the debate over legalization of marijuana is the question of taxes. Taxing marijuana sales stands to take measures a tremendous economic boon for states in which pot is legal. However, taxes mean an increase in the price of marijuana for the character. If taxes are too high, or if the balance is not maintained carefully, the demand for marijuana could easily drop off. This would denote lower sales and, for investors in marijuana companies, potential losses.
How Are Marijuana Companies Valued?
Many of today’s unrivalled marijuana companies are enjoying the benefits of high
How Many Marijuana Companies Will Actually Make It?
Investors looking to hook part in the legal cannabis industry should keep in mind that the field is currently quite crowded. Hundreds of trains around the world are vying for dominance in an industry that is still young and developing. In all likelihood, only a few of these public limited companies will ever grow into major market players. Many others will likely maintain negligible operations or even shutter under market pressure.
Some stocks are safer bets than others, but it’s incredibly ill-behaved for the everyday investor to predict which companies will come out on top and bottom. Marijuana stocks are incredibly volatile honestly now, and that means every investment should be taken with extreme caution. Although there are reasons to delay when it comes to investing in the legal cannabis industry, many investors also see tremendous opportunity. The question that balances to be seen is whether the potential rewards outweigh the risks involved. Unfortunately, that question can only be answered in remembering.