As the cannabis markets gain growth in North America including Canada and the United States, investors are showing certainty in global marijuana stocks. Since the legalisation of marijuana in Canada and 34 states in the US, investors are betting millions of dollars in different sectors of the industry. The problem is selecting cannabis companies with promising growth and excellent cost controls. In Canada, stocks increased to 40 percent for some businesses while other companies experienced a decrease in stock prices.
When stock prices decline for various companies, investors may opt to sell quickly. The problem lies in insufficient cost control. Most businesses in the cannabis industry are in its early startup stage which causes investors to panic and lose patience. The concerns will cause marijuana business leaders to address those issues among shareholders.
Experts suggest investors focus on a company’s revenue growth and costs control in the short term to avoid or reduce stock prices. Overtime it will make investors billions of dollars as seen with some Canadian and American cannabis businesses.
Analysts are predicting small marijuana companies will go public and generate $500 million to $3 billion in capital. With those forecasts and existing success of small to large corporations in the US and Canada, it should reassure investors the potential of expansive growth. Presented below are nine reasons with substantiating facts for investing in cannabis stocks to give investors reassurance in future marijuana investments.
Cannabis market continuous growth in the US. The cannabis market is vast and provides investors with the opportunity to increase existence in a growing industry. In the US, the cannabis market reached $11 billion the end of April 2019. It continues to grow as of August and represent a 25 percent of the international market. A law just recently passed in Ohio to legalise marijuana which expands opportunities for investors in OH stock.
Proposed legislation to decriminalise the use of marijuana. Decriminalisation of cannabis through the 2019 Marijuana Justice Act is a new proposed bill. The proposed legislation is a federal and state reconciliation of existing laws. The aim is to remove cannabis from the Controlled Substances Act. This is great news for investors doubtful in investing into the US marijuana market and should give them a peace of mind.
Introduction of the US States Act. The States Act has a bipartisan support which will block the interference from the US Federal Government. The bill applies to legalised cannabis states. Banks and institutional investors will receive protection on a federal level for the first time in American history when this Act passes.
Marijuana stocks become dominate in US and Canada. American investors had limitations on purchasing stocks in the US and bought shares in Canadian cannabis market instead. There are over 12 listings of cannabis stock on NY Stock Exchange. It seems the stigma with investing in marijuana stocks are vanishing quickly.
Wall Street is getting involved for the first time in years. Wall Street analysts are now discussing and covering cannabis stocks after ignoring it in the past two years. It is gaining the attention of investors in different sectors of the marijuana industry to reduce investment skepticism.
Partnerships and deals with large international companies. Since 2018, partnerships and deals among larger companies worldwide is bringing an upside for cannabis stocks. Investors in Canada, United States, and other world countries can invest in these companies to balance risk with small company investments.
US States welcome cannabis businesses to contribute to local economies. So far, 34 US states legalised medicinal cannabis and 11 states legalised recreational and medicinal marijuana. Without the support of federal law, companies are finding support in those states to operate in America and build its brands until the passing of federal legislation.
Positive trends of public opinions on marijuana. Approximately one-third of Americans supported the federal law in 2003. By 2019, the trend changed with two-thirds of the public in favor of legalising cannabis sales for recreational and medicinal uses. That is a 54 percent increase compared to the statistics in 2016. Among the younger generations, people under the age 35 are supporting federal legalization.
New development and discoveries of medical marijuana use. Research & Development in the medical professional are discovering and developing new medicines. It is growing significantly to treat certain mental and physical illnesses. Doctors are prescribing cannabis medicines and products to treat chronic pain, muscle aches, sleep disorders, epileptic seizures, and inflammation, to name a few. It is in high demand and easing the stigma associated with cannabis which is driving recreational use in North American countries.
Investors in the 1930s most likely had similar reactions to stocks during the legalization of alcohol. Now that Wall Street is paying close attention to the cannabis market, investors should feel comfortable in investing in marijuana stocks. We should select companies whether large, mid-size, or small based on profitability and effective cost control.