Some investors see a great future in cannabis. The raw material is increasingly used medicinally and is no longer exclusively categorized as a narcotic. It is a volatile sector to invest in – which means that the prices of the individual shares can fluctuate a lot both up and down.
Several countries are legalizing cannabis for medical use. However, it is also becoming more and more common for cannabis to be accepted as an intoxicant on a par with alcohol. The development in American states where it is legal to smoke cannabis has meant a lot to how cannabis is viewed in general.
If cannabis is legalized in even more countries, buying shares in companies that deal with cannabis in various ways can be a real hit. However, it must be said that it is still a fairly new area, so nothing can be taken for granted.
That’s why you should buy Cannabis shares
What is cannabis?
When you refer to cannabis, you can refer to both an intoxicant and CBD oil, which you are not affected by consuming. Regular cannabis contains both CBD and THC. The active substance CBD is tested to a large extent worldwide, as it can of course be used in medicine to treat everything from anxiety to ADHD or just general pain.
It must definitely be mentioned that there are no final conclusions in the area. There are about as many skeptics as there are professionals who believe in cannabis as a medical preparation.
Cannabis as an intoxicant has been legalized in several countries. Canada, the USA, the Netherlands and Uruguay are frontrunners in that area. However, it is difficult to predict how the development will proceed.
You can also find cannabis elements in various forms of nutritional supplements, which cannot therefore be described as actual medicine. In summary, there is really great potential for the further spread of the raw material cannabis.
Goldman Sachs has, among other things, threw huge sums at the cannabis sector. It is clear that the earlier you get into something that might gain global spread – the greater the return you can enjoy. But there are no guarantees when investing – not even when buying cannabis shares.
That’s why Cannabis stocks are rising
In February 2021, we saw a massive rise in many popular cannabis stocks. It was especially the large cannabis stocks in the US and Canada that ended up rising sharply. This massive increase once again seems to come from the infamous Reddit group WallstreeBets. We’ve mentioned them before, when they caused GameStop shares to rise significantly in January.
It is possible that the increase in cannabis shares this time was due to WallStreetBets, but there is much more to the many companies that work with cannabis. Further down in this post, you can see our list of good cannabis stocks that you should invest in or keep an eye on.
Many expect that over the next 10 years we will see a significant increase for the cannabis market.
With a new president in the United States, it looks like the United States will open up more to cannabis, as 14 states out of 50 have already legalized it for recreational use. As many as 35 starts, it is legal for medical use. It is therefore not a win-win situation to keep cannabis as a Schedule I drug. Therefore, many expect that President Biden will end up removing it from the list. That doesn’t mean it will necessarily be legal in all 50 states. Initially, it will probably be up to the individual state, but it is clear that the states that remain outside the systems lose the opportunity for many tax crowns.
As you can see from the picture, there is a big business in allowing cannabis in his state. Before, all the money went to criminals. Colorado legalized it in 2012, which is why they have earned $1.21 billion in tax revenue. This is what the other US states can see that it is missing out on.
Since the US states are not going to lose this money, you can be pretty sure that cannabis stocks are a good business. Because when it comes to investing in cannabis, it is more likely that we will see even more states legalize it. If President Biden’s Administration makes it an important point, they could pave the way for an increase of over 100% for the entire industry.
In the EU and even Denmark, you also watch what happens in the USA. Because it is a lot of money that the Danish state misses out on every year.
Possible legalization in Denmark and the EU
Since the 70s, the Danish hashish debate has been something that has been discussed extensively. On several occasions, youth politicians in particular have used it to show a simple place to scrape in more tax revenue.
In 2016, a Gallup poll came out , which showed that 45% believe that it should be legal to smoke weed, while 41 percent believed that it should remain prohibited. It is a historic measurement, as it shows that it is the politicians in Denmark and not the population who want a ban. This is good news for anyone who has made a cannabis investment. If in the long run there are most people who want it to be decriminalized, then history suggests that this will also happen. There are already medicines with cannabis that you can buy on prescription. So we have already seen a change in Denmark.
Several countries in the EU have already chosen a softer approach to cannabis than we have in Denmark.
The picture shows where it is no longer possible to go to prison for minor possession of hashish. Even in Denmark, you will initially receive a fine, but in the worst case you can end up in prison.
This does not mean that we are currently going to see an increase in cannabis companies, because it is often illegal, and thus difficult to impossible to set up a company that only works with cannabis. But there are many indications that this is where it is moving, as the EU begins to get relevant data than on hashish abuse. A country like Portugal has chosen a very soft approach to all euphoric drugs. Hash for medicine also became legal in 2018.
The mood is starting to be that many EU countries can see that they are missing out on tax revenue by having a ban on cannabis, which many already consume anyway.
Even without the EU, the cannabis market will increase significantly over the next few years, as we see a large increase in the US in this area. The cannabis market is expected to be over 70 billion in 2027. It may end up being put conservatively if we see further legalization in several countries and US states.
Buy cannabis – How do you invest in cannabis?
You can invest in cannabis as a commodity via a specially designed index. However, the selection of these is not yet very large, which is why it is perhaps more obvious to look at other options.
The cannabis sector can also be followed via investment in an ETF, which includes shares from a number of companies. Here you benefit from an average from the market instead of putting all your eggs in one or a few baskets.
Some platforms provide an actual cannabis index. This is worth a closer look if you believe in the sector as a whole – but otherwise do not know which companies are further along in the development of, for example, medical cannabis.
It is often the case with new sectors that it is difficult to identify the winners in advance. Sometimes things can happen that turn the development upside down. By the way, broad investing is not just for beginners. Many experienced investors never buy shares in individual companies. There are clearly advantages to being broad in the market.
Buy Cannabis Stocks
One of the most popular ways to invest in Cannabis is by buying cannabis stocks. Today, there are a number of companies that work with Cannabis for various reasons. You can invest in these types of companies
- Cannabis for recreational use
- Cannabis for medical use
- CBD oil as part of the health industry
There is plenty of opportunity to invest in companies that work with cannabis, but here you have to evaluate them in the same way as you would normally do with other limited companies. Because even if cannabis is the future, it is not certain that all joint-stock companies will do well, as it is about general management.
You can look up all these companies and find out how they work with cannabis. Eg. invests About Auxly Cannabis Group Inc. in other companies that work with cannabis.
If you invest in cannabis through individual companies, you should be aware of the risk. If the company goes bankrupt, you end up losing your money. This development can occur when it comes to companies that venture into new and unknown areas.
The competition in the medical cannabis sector is also very high. It goes without saying that not all companies will prove sustainable in the long run. For this reason alone, it is worth considering a broad investment in the sector, where you are not dependent on the success of individual companies.
Look through the list of cannabis companies below. This will help you to a greater understanding of the market. Then find a suitable platform if you want to invest a larger or smaller amount in the sector.
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Buying shares is at your own risk.
The best cannabis stocks in 2022
- Aurora Cannabis Inc.
- Canopy Growth Corporation
- Tilray, Inc.
Investing in cannabis through an ETF
Rather than investing in cannabis companies yourself, you can also buy an ETF. There are a number of ETFs that focus on different areas within cannabis. It can be an ETF focused on the health industry with cannabis or against all producers of cannabis. That way, you can spread your risk and you don’t have to do anything other than buy an ETF.
The Global X Cannabis ETF is a brand new ETF that invests in companies that earn min. half of their turnover in some form of cannabis sales. If you think that the entire industry is going up, then this is a really good bet for an ETF that you can invest in.
At CannabisCare, you invest in a number of companies, all of which have in common that they work with cannabis within the pharmaceutical industry. It is a market which is itself increasing in Europe, as several medicinal products have already been approved.
The advantage here is that you make money if the whole industry goes up, so you don’t have to find out if you believe in the individual company.
Which investment method is best for me?
There are currently not so good options if you are a day trader or a very active investor, so currently will it be most interesting to buy cannabis shares or an ETF because you believe that cannabis will increase significantly in the future. Many believe that it is an industry where you can significantly increase your fortune, so it is definitely worth investing in a cannabis business now if you believe that this is the case. You can also invest in other commodities such as oil , gold , silver , wheat , copper , sugar, platinum and nickel .
My advice is that you analyze the companies that you invest in and then I would choose more than one, so that you spread your risk that way. You can also consider investing in an ETF, but here I will keep an eye on it because it is a completely new concept, so no one knows how it will perform. Here I mostly think about whether the people behind the ETFs are competent, because if they are, it is a good cheap way to invest in the entire industry.
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Buying shares is at your own risk.
Frequently asked questions
Why invest in cannabis?
How do you make an investment in cannabis?
Is an investment in cannabis shares a good idea?
How do you make a medical cannabis investment?