Marijuana companies, pot stocks, cannabis plays, call it what you like — interest in this sector is exploding.
With new listings and expanding production, everyone in the sector is trying to carve out a slice of the market.
But with fierce competition comes the need to separate hype from reality.
Before anything else though, there’s a question you need to ask yourself…
Why invest in Marijuana Stocks?
The number one reason to invest in cannabis comes down to one word: growth.
30 countries have now fully or partially legalised consumption of marijuana, including large swathes of the US.
New York-based investment bank Jefferies Group LLC, projects that the global cannabis industry could be worth up to $130 billion by 2029.
Projections for future growth in the industry vary, but the consensus is that the industry is booming.
So how do you profit from this megatrend?
The growth of ASX-listed cannabis stocks
ASX-listed cannabis companies offer one way for Australian investors to get amongst the action.
The story of these companies started with the legalisation of marijuana in Australia for medicinal purposes in 2016.
Soon thereafter, companies began to emerge seeking to capitalise on the change in law.
Some of these ‘Marijuana Stocks’ took off after their IPOs, only to sink after investors realised they would have to wait for returns.
Others have only just begun their climb, expanding into new markets and growing their brand. And of course, some have proven to be duds.
But remember, the Aussie cannabis market is still in its infancy, with a tightly regulated medicinal regime in place.
This doesn’t mean that there aren’t profits to be made, it’s just that you need to think globally when looking at Australian cannabis stocks.
There is the Canadian market, the US market not to mention Europe and Asia.
Which brings us to our next question…
What to look for in marijuana companies?
There’s a diverse array of terminology that gets thrown around when discussing marijuana stocks.
For example, you need to know the difference between Cannabinoid (CBD) and Tetrahydrocannabinol (THC), the importance of value-added products, the value of hemp versus flower and a little about regulatory environments for starters.
Then there are the greenhouses, processing plants, offtake agreements and distribution partnerships.
And even if you have wrapped your head around all of this, you still need to have a sound understanding of a company’s finances.
If this sounds daunting, don’t worry.
By following our coverage, you can learn about the intricate world of cannabis stocks without having to buy expensive market research or spend weeks reading up on companies.
We aim to inform, enlighten and spark investment ideas at Money Morning.
So when we cover pot stocks, we cut straight to the chase, pull out the key data and the bottom line as quickly as possible.
Note: We don’t provide financial advice or recommend particular stocks — that is something we do in our subscription services.
What we do offer however, is helpful articles and timely analysis.
You can check out all our cannabis stock related articles below.