With continuous decriminalization in the states, the cannabis industry has shown signs of a tremendous economic boom. In 2019, the industry was valued at $1,788 million USD and it was expected to grow at a surprising 17% CAGR till 2026. More so, Covid-19 has reshaped the industry dynamics; it is now growing at a much faster rate. It shouldn’t come as a surprise that cannabis is now a promising investment opportunity – so let’s talk about how to invest in cannabis stocks for beginners.
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If you’re thinking about investing your capital in the cannabis or the industry, this article is for you. Cannabis stock investors realize the tremendous growth potential here. Keep reading to learn how to begin investing in cannabis stocks..
Basics of Marijuana Industry
Marijuana is quite popular amongst medicinal as well as recreational consumers. And it has not gained popularity overnight.
Not more than a decade ago, the trade was explicit and mostly carried out in dark alleys and underground.
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But, now the scenario has changed both politically and economically.
Today all sorts of products infused with the herb or its extracts are available in the market. Not to mention, consumers can buy buds, shatter, concentrates, and edibles online from the comfort of their homes.
Clearly, the market is not reaching naturalization anytime soon. And the fact that it is still a young industry (politically) adds more to it. But how do I invest in cannabis stocks?
Three Primary Options for Cannabis stock Investing
Now that you have a ballpark idea about the industry, you might understand the cognitive parts involved.
Primarily, there are three key players in the cannabis market:
Investing in Cultivators
Cultivators make up for the largest market for investment in terms of volume.
Across the US, there are thousands of home-grown marijuana companies, and the number is still growing.
However, despite its sheer volume, the industry offers marginal returns for investors. The reason being, cost of cultivation in a controlled environment is relatively high, along with the waste management it requires.
Investing in Dispensaries and Biotech
What cultivators gain by their sheer number, dispensaries and biotech industries make up in margins.
Most of the pharmacies have their own laboratory to make their products. These are generally the independent research labs that carry out various studies around cannabis and its compounds. And formulate new products and medicines from it.
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And it needs no mention of how promising the wellness industry is for investors. That includes dispensaries and biotech industries too.
Investing in Retailers or Channel Partners
Last but not least, at the bottom of the supply chain comes the retailers and channel partners.
These include a whole set of industries within, for example, packaging, retail dispensaries, cosmetics, and more.
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To your surprise, retailers and channel partners are the most promising sector for investors, especially since industries can survive the maturation of the cannabis market if it ever comes.
The Bottomline: How to Invest in Cannabis Stocks
If you’ve already made up your mind to invest your money in the cannabis industry or its subsidiaries, make sure you understand the trading principles too.
Trading in cannabis stocks is a lot like trading any other commodity on the economic market.
The key to winning is not making the investment but doing so in time and betting on the right stock. Like any other stock you buy, “time in market” is much more important than “timing the market”. Do your research and find the strongest cannabis stocks both fundamentally and technically. This is the absolute best way to invest in cannabis stocks.
How To Invest In Cannabis Stocks – For Beginners
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