The stock market is considered a great place to create wealth due to the endless opportunities it provides to multiply your money. What’s more, you can invest in anything, starting from dominant growth stocks to small-cap diamonds in the rough to increase your income. Some of the most promising investments can also be found in the cannabis industry.
Since more and more states and countries begin to legalise marijuana, while its benefits and healing properties are being more widely used, the industry is becoming a hotbed of investment opportunities these days. But is it worth putting your cash behind this industry? Here are three benefits of investing in cannabis stocks.
Is Investing In Cannabis Legal?
Recent changes in federal law – specifically The 2018 Farm Bill states that the plant is referred to as industrial hemp if it includes less than 0.03% of THC, which frees hemp from associations with marijuana. The signing of this bill, in turn, makes hemp a common agricultural commodity, and now farmers have access to water rights, banking, grants, crop insurance and many other benefits.
As federal law made this significant update, interest in investing in hemp and cannabis could skyrocket in the United States and the world in general. However, is it illegal to invest in cannabis? The exact answer will depend on the laws of your state and country and the degree of risk you are willing to take early on.
Key Advantages To Invest In Cannabis Stocks
Long-Term Growth
With all the hype surrounding the cannabis market and the growing recognition of its legitimacy across the whole world, this sector is expected to grow rapidly. The cannabis market should expand either for recreational uses due to legalisation and for medicinal purposes because of the wide range of potential health benefits and therapeutic effects the plant offers.
As stated in a report released by Grand View Research, the global legal marijuana market is projected to reach $73.6 billion by 2027, that is an average annual growth rate of 18%. Considering this tremendous growth and the high expectations, investments in the cannabis industry is a long-term commitment. You will probably get the most significant earnings if you are prepared to watch your cash grow alow with the trajectory of the sector as a whole, making cannabis stocks an attractive long-term investment.
Increasing Demand
The cannabis industry is currently booming all across the globe and growing in both market size and value. As mentioned earlier, an increasing number of countries and states are starting to legalise and regulate the production, cultivation and purchase of cannabis, so the market is responding accordingly. The legal cultivation and consumption of cannabis for medicinal or adult-use are becoming more common, and products infused with cannabis and its derivatives like CBD oil are experiencing rapid market growth. From oral tinctures and capsules to edibles like CBD oil gummies – the shelves of various stores full of cannabis- and CBD enriched products, and a huge number of offers from online sellers is a direct confirmation.
While some investors consider investing in this industry risky, the bright side is that investing in one of the fast-growing sectors of the economy offers a high reward potential. As more states join the legalisation of medicinal marijuana, the stigma associated with cannabis will probably continue to decline. This adoption will drive the industry forward and open up new opportunities for monetising its growth.
Relatively Inexpensive Stock Prices
Perhaps one of the main reasons to consider investing in cannabis stocks is that they are not really that expensive. Given the high levels of demand that cannabis has seen during the pandemic and the potential it has for growth, the stock prices of various large companies in the market, such as Aphria, Aurora Cannabis, Canopy Growth, Love Hemp and Tilray, are still remaining much lower than they potentially could be.
While it goes without saying that this advantage can tip the other way, it is fair to suggest that the likelihood of a sharp rise in cannabis stock prices in the near future is incredibly high. Therefore, the current stock prices might seem like a solid starting point for anyone looking to make investments.
