The cannabis industry is one of the fastest-growing and most dynamic sectors today. With more countries and states legalizing cannabis for medical and recreational use, the demand for cannabis products is soaring. According to Grandview Research, the global market size for the cannabis industry will reach $102.2 billion by 2030.
But how can investors take advantage of this green rush? What are the best strategies to invest in marijuana stocks and ETFs? And what are the risks and challenges that cannabis investors should be aware of?
Green Investing: How Cannabis is Creating Jobs and Boosting the Economy
One of the main reasons cannabis attracts so much attention from investors is its positive impact on the economy. Cannabis creates jobs, generates tax revenues, and stimulates innovation across various industries.
Cannabis also contributes to the public coffers through taxes and fees. In 2020, U.S. states collected more than $3 billion in cannabis taxes, a 50% increase from 2019. Some of these revenues fund social programs like education, health care, and drug prevention.
Moreover, cannabis drives innovation and entrepreneurship in various sectors, such as agriculture, biotechnology, health care, retail, and technology. Cannabis companies are developing new products, services, and solutions to meet consumers’ and patients’ diverse needs and preferences.
For investors who want to support the growth and development of the cannabis industry, there are several ways to invest in marijuana stocks. One option is to invest in multi-state operators (MSOs), companies that grow, process, distribute, and sell cannabis products in multiple U.S. states. Some of the largest and most profitable MSOs include Green Thumb Industries (OTC:GTBIF) and Cresco Labs (OTC:CRLBF), which own over 80 retail stores each across 15 states.
Another option is to invest in ancillary providers, companies that provide products or services to the cannabis industry without touching the plant itself. These include real estate investment trusts (REITs), hydroponics suppliers, fertilizer makers, and software developers. Some examples of ancillary providers are Innovative Industrial Properties (NYSE:IIPR), GrowGeneration (NASDAQ:GRWG), Scotts Miracle-Gro (NYSE:SMG), and Akerna (NASDAQ:KERN).
The Future of Cannabis: Emerging Trends and Opportunities for Investors
While the cannabis industry has already achieved impressive growth in recent years, there are still many opportunities for further expansion and innovation. Here are some of the emerging trends and opportunities that investors should watch for in the future:
– Federal legalization: One of the biggest catalysts for the cannabis industry would be federal legalization in the U.S., which would remove many legal barriers and uncertainties for cannabis businesses and consumers. The Biden administration has signaled its intention to reclassify marijuana from a Schedule 1 controlled substance (no accepted medical use and a high potential for abuse) to Schedule 3 (drugs that have moderate to low potential for physical and psychological dependence). This would allow more research on the medical benefits of cannabis, as well as enable cannabis companies to access banking services, list on major U.S. stock exchanges, and operate across state lines.
– International expansion: Another significant opportunity for the cannabis industry is international expansion, as more countries around the world legalize or decriminalize cannabis for medical or recreational use. The most promising markets include Canada, Mexico, Germany, France, Israel, Australia, New Zealand, Thailand, South Korea, and Colombia. Investors who want to gain exposure to these markets can invest in global cannabis companies with operations or partnerships in multiple countries. Some examples are Canopy Growth (NASDAQ:CGC), Tilray (NASDAQ:TLRY), Aphria (NASDAQ:APHA), and Cronos Group (NASDAQ:CRON).
– Product innovation: A third opportunity for the cannabis industry is product innovation, as cannabis companies develop new and improved products to cater to consumers’ and patients’ evolving needs and preferences. Some product categories expected to grow in popularity and demand include edibles, beverages, vapes, concentrates, topicals, and wellness products. Investors who want to invest in product innovation can look for cannabis companies that have strong brands, diverse product portfolios, and robust research and development capabilities. Some examples for the best cannabis stocks to invest in are Curaleaf (OTC:CURLF), Trulieve (OTC:TCNNF), Charlotte’s Web (OTC:CWBHF), and Jazz Pharmaceuticals (NASDAQ:JAZZ).
Conclusion
The cannabis industry is a dynamic and exciting sector that offers many opportunities for investors willing to take risks and do their homework. By following some of the strategies and tips discussed in this article, investors can navigate the green rush and potentially reap the rewards of investing in marijuana stocks and ETFs.
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