4 Tips On How To Invest In Weed Stocks

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David Robinson By David Robinson | Author

Weed Stocks: The Next Gold Rush?

The medical marijuana market is going to be worth more than $21 billion by 2020 according to the latest estimates. Hence, why not invest in the next gold rush and maximize your opportunity for massive profits? Have you picked out your favorite marijuana penny stocks as yet? This article goes over some tips on how to invest in weed stocks, and potentially make a killing.

1There Is A Big Risk Involved In Investing!

The medical marijuana industry is witnessing a crazy upward spiral in the past couple of years. In fact, the marijuana penny stocks are seeing amazing gains comparable only to the dot-com gold rush in the 2000s. The latest analysis in the industry predicts the growth to continue over the next decade. Since the marijuana penny stock market has its own risks, the investor should be extra cautious with his or her investment portfolio.

You should invest in the penny stocks that fly higher in order to make some gains in the process. In fact, there are some penny stocks that you should invest and some others that you need to avoid. But you shouldn't take it as a negative thing. Instead, you have to have a knowledge of what you are dealing with. Investing in the wrong penny stock will burn a hole in your pocket.

2The Legal Status Of This Young Industry

Similar to the tech boom in the early 2000s, the marijuana stocks are valued on their perceived future revenue than the current status of their cash flow. Everybody witnessed what happened in the dot-com gold rush craze. Smart businesses figured the process out and became multimillionaires while some companies left the market since there was too much hype at the time. For example, the company that has the largest marijuana stock - GW Pharmaceuticals (NASDAQ: GWPH) - sells an effective drug known as Epidiolex - which is intended to reduce the frequency of seizures in kids. But the stock will not see much profitability for years to come.

Since Jeff Sessions is not a fan of the marijuana penny stock debate, we have to wait and watch what his reaction is going to be on the weed stocks. In fact, there is a lot of momentum towards legalizing the process at the moment. Hence, if you are a medical marijuana stock investor, there is no need to be anxious and panic. You need to stay alert at all times with the right trade plan in place.

3No Tax Deductions Or Bank Accounts

Banks have to answer to the federal government when it comes to their clients. As of today, marijuana is still considered an illegal substance as per the federal legislature. This means selling marijuana stocks is technically a violation of the federal law. Hence, such businesses cannot open a bank account according to the law of the country. Hence, marijuana companies have no other option but to deal with straight cash - which could be a bottleneck in the investment process.

Since the marijuana companies are dealing with an illegal product in the eyes of the US government, they won't qualify for standard tax deductions that other businesses qualify for. Hence, you need to understand this when you decide to invest in marijuana penny stocks on the market. But the trend will change in the next couple of years.

4The Projections For Growth

Selecting the right marijuana penny stock to invest is not an easy task after all. It should start with the right amount of research on your part. Make sure you have an idea of the current status of the marijuana marketplace first of all. Colorado legalized recreational marijuana sales in 2016. The sales exceeded $1 billion for the 1st time in the US. In fact, the medical and recreational marijuana growth in Colorado is expected to more than double by 2020.

Market analysts differ on the projects of growth and the best stocks to buy in the marijuana market. All these experts agree on one thing - and that is - the marijuana market is a multi-billion-dollar industry right now. Matt Karnes from GreenWave accompanies many other analysts to estimate the compound annual growth rate of the marijuana market to increase by 35% by the year 2020. In fact, a 35% growth per year is an incredible scenario. But it doesn't even come close to some other projection by financial experts that say the market is bound to climb higher than $50 billion in the next decade - provided that marijuana is legalized on a federal level. If that happens, guides on how to invest in weed stocks will be absolutely booming.