Marijuana Stocks: Should They Be in Your Pot-folio?
Key takeaways
- Countries are slowly legalizing cannabis, making investment appealing
- It’s a speculative sector, so it’s very high risk
- You can invest in pure-play marijuana stocks or those expanding into the market
With cannabis use growing in acceptance worldwide, it makes sense to look into weed stocks as an investor. These stocks don’t just encompass growers and retail; they also get into pharmaceuticals and distribution specialists. So let’s see what’s new in the marijuana world and whether anything’s worth investing in.
While some people view “sin stocks” as unethical and give them a wide berth, other investors can’t wait to get stuck in. If you’re enthusiastic, you’ll love Q.ai’s Guilty Pleasures Kit. This Kit finds the best taboo stocks every week, automatically rebalancing your portfolio to make the most of regulation and price changes.
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What’s going on in the weed world?
First, a little backstory. California became the first U.S. state to legalize medical marijuana use in 1996, and its acceptance has increased worldwide. 38 states have legalized medical use, and 21 states have legalized recreational use. Seven countries, including Canada and Mexico, have legalized recreational use. So it’s slowly on the up and up.
As ever, U.S. policymakers are clashing over legalization. Three Senators introduced the “Cannabis Administration and Opportunity Act” (CAOA) in July 2022.
The act aims to decriminalize cannabis federally and acknowledge individual states’ marijuana laws. While the bill has support, it’s unlikely to pass at this point, especially as President Biden has expressed his lack of support for federal marijuana legalization.
Another blow to the cannabis industry is the delay in the SAFE Banking Act going through Congress. This Act ensures that financial institutions won’t be penalized for providing banking services to cannabis companies. For now, weed companies must deal in cash or work around these regulations.
How does this Capitol wishy-washiness impact marijuana stocks?
Latest weed stock developments
Since April 26, Tilray (TLRY) has seen an impressive 27% jump in its stock price. The company expanded its product offerings and global reach in April. A big reason for the jump is likely the SAFE Banking Act move.
On the other hand, Canopy Growth Corporation has plummeted over 57% since February after announcing disappointing earnings. Fundamental and technical indicators imply the stock is oversold, so analysts have issued an average “hold” rating.
Is it wise to invest in weed?
With marijuana stocks being highly speculative and the Securities and Exchange Commission (SEC) warning about scams, it’s an investment that requires serious consideration.
Many weed stocks are microcaps, meaning they have a market cap of under $300 million. The issues with microcap companies include:
- High volatility
- Lack of public information, reducing transparency
- Low liquidity
- Easier to manipulate
If you want to invest in marijuana stocks, do your due diligence and diversify your portfolio. One way to invest in weed with a little less volatility is through an exchange-traded fund (ETF) or an established company that’s expanded its offerings into cannabis.
While marijuana stocks may be attractive, they can also be immensely volatile and fraught with risk. Q.ai’s high-risk Guilty Pleasures Kit offers a great opportunity to invest in a diversified cannabis portfolio with fantastic growth opportunities, with AI making the weekly investment decisions on your behalf.
Download Q.ai today for access to AI-powered investment strategies.
