There are three big myths about cannabis investing that are keeping retail investors on the sidelines. Today, we are going to dispel all of them…
Cannabis is illegal under U.S. federal law, so the myths and misconceptions about the cannabis industry run rampant.
Unfortunately, there are not a lot of educational research reports written for retail investors to let them know what’s true and what isn’t.
Today, we’re going to change that.
In this helpful guide, we’re going to dispel three of the biggest myths surrounding cannabis investing. That way, if you’ve been sitting on the sidelines because you’ve been unsure about what to do, you can jump right into the game.
Myth No. 1: Cannabis Stocks Are Illegal
We have people write in and ask whether it is legal to buy cannabis or CBD stocks, and we understand why some folks ask this question.
But even if cannabis is illegal in your state, you can still buy cannabis stocks.
Now, we have heard certain instances where smaller brokers choose not to trade cannabis stocks, but that’s more of an individual company decision than anything else.
John Boehner was once “unalterably opposed” to cannabis legalization. To find out why he’s now “all in” on cannabis – and why you should be too – click here.
However, large brokers deal with cannabis stocks, and you can find a list of them on our helpful FAQ page.
Cannabis is completely legal in Canada, so you can buy Canadian-based companies on Canadian exchanges or through over the counter markets (OTC) if they are listed there.
Additionally, you can buy U.S. cannabis companies that trade over the counter.
You can also access this page to learn more about the different exchanges and how they operate. Remember that in order to get started buying cannabis stocks, you need to set up a brokerage account.
Myth No. 2: All Marijuana Stocks Are Risky
The truth is that there’s always a chance to lose money in the stock market. It doesn’t matter if it’s a blue-chip stock or a penny stock. All companies go through peaks and valleys, and if stock prices always went up, everyone would be a millionaire or billionaire.
The only difference with the cannabis industry right now is that, because it is so new, a lot of people will buy any cannabis stock they find listed on the internet. They don’t look at the business or really understand how the company operates – they just want to get in early.
That’s understandable, but just looking for a list of cannabis stocks on Google is no way to build a potential nest egg.
That’s why we launched NICILytics, which has more than 160 ratings on cannabis firms. We gave all the companies a rating from 0-5, and you can even sort them by rating, sub-sector, and price. That way, you will have a better chance at identifying what companies deserve your hard-earned money.
Again, it’s just another tool you could utilize in identifying the top-tier cannabis stocks.
Myth No. 3: You Have to Get in Before an IPO to Make Money
It’s true that there can be a great deal of money made by investing in a company before it’s public. That’s one of the reasons why we launched the Cannabis Venture Syndicate, to help our readers identify promising deals that don’t require them to be an accredited investor.
However, you can also make a lot of money by investing in IPOs the day shares open up to the public.
When Tilray Inc. (Nasdaq: TLRY) shares were listed on the Nasdaq on July 19, 2018, they opened to the public at $23.05. By September 19, 2018, shares reached $300 a piece in intra-day trading. If you bought in on the day of the IPO at $23.05, that’s a return of 1,201%.
Every $10,000 you initially invested would be worth $130,000.
But, it’s just as important to know which IPOs to buy as it is which IPOs to avoid. Also, you’re sometimes better off waiting a few days, weeks, or months before buying shares of an IPO, because sometimes waiting allows you to enter at a much more favorable price point.
Yes, you can Google which cannabis IPOs are going public, but that doesn’t provide you with any idea of whether you should invest your hard-earned money.
For example, Hemp Inc. (OTC: HEMP) shares were listed at $0.79 per share on Feb. 12, 2013. Now they trade for $0.02 per share, which is a 97% loss. Buying these duds can ruin your portfolio, and it could make it nearly impossible to ever break even.
Cannabis Myths Busted
We hope that you found this guide helpful, and we wanted to leave you with some additional research to help you get started with cannabis investing.
To help get all of our members started, we have free research reports about cannabis companies or companies working within the cannabis sector that we believe should be in every portfolio.
And I want to make sure you check back with us tomorrow, when I’ll be answering questions about how to approach trade alerts, the timing of great opportunities, and more.
I’ll see you then.
Executive Director, National Institute for Cannabis Investors
P.S. If you’re serious about cannabis investing, you need access to this one-of-a-kind investing tool. Our stock screening NICILytics system can be used to double… triple… or even quadruple your profit potential. This could be the competitive edge you need to soar in the cannabis investing arena. To learn more, click here.
7 responses to “3 Myths About Cannabis Investing Dispelled”
May 17 2019