Pros and cons of investing in cannabis stocks

Business, Marijuana, Money, Rights

In 2016, cannabis was a $17 billion industry. Projections indicate that by 2020 it might boost the US economy by $44 billion annually. So why isn’t everyone investing in the cannabis business?

Would-be cannabis investors are riding a wave of uncertainty  as they try to sort out the Trump administration’s policy toward legalized marijuana. Will the “states’ rights” position espoused by candidate Trump hold sway, or will his administration crack down on legalized recreational pot, as foreshadowed by recent statements?

Those in the know are hopeful…

“The legal cannabis industry remains one of the most lucrative industries for investors,” says capitalist Jeff Siegel, an expert on socially responsible investing. “The attorney general is an outspoken prohibitionist, but he has neither the funds nor the support to shut down what is now a flourishing, multi-billion-dollar industry.”

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“Investment in the cannabis field will continue with optimism,” says Serge Chistov of “No major change in investment attitude is expected because the [Trump] administration will continue to leave the power in the state hands of local municipalities.”

…but cautious

“The Trump administration’s unclear stance on the cannabis industry has caused some concern in the space,” says Jeffrey Zucker, president of Green Lion Partners, a business strategy firm focused for the regulated cannabis industry. But while investors “have more fear” than they did last year, most are still “excited” to jump in.

Still, Tanya Hoke of Galen Diligence, which supports operators in the cannabis industry, says the new administration’s mixed messages are indeed affecting investment in the industry. “Investors aren’t deciding whether to invest in cannabis or nothing at all, they’re comparing investment opportunities with other, less-risky investments,” she says. “They have to decide if the potential rewards in the long term make up for the high levels of uncertainty in the near term.”

Stay focused

In general terms, over the next four years the stock market will see highs and lows, as it would under any administration. For long-term investors, it’s the nature of the game. Rather than focus on investing in a controversial new commodity like cannabis, the experts at NerdWallet, Inc. encourage investors to “embrace classic investment wisdom” to maintain profitability. In particular, they advise:

  • Don’t let politics dictate your decisions
  • Don’t fixate on a single factor (such as Trump) when making investment decisions
  • Diversify
  • Embrace risks for potential long-term gain

Zucker adds, “It is important to stay acutely aware of the politics around the cannabis industry, but investors seem to know that the industry isn’t going away at this point.”