Investing in stocks is always somewhat risky. You never know what factors may bring one company down or what success another might have. With that in mind, one should never invest more than one can comfortably afford to lose. However, certain risk taking ventures can increase your return substantially, so consulting experts is always a sound idea.
With so many states, and even a few countries, legalizing marijuana and cannabis based products for various uses, getting your foot in the door seems like a sound plan. The challenge will not be in finding a company to invest with, it will be in choosing among the many companies available.
A Top Five
One of the safer companies is called Canopy Growth Corporation. One of the reasons it is considered one of the “safest” companies to invest with is that it has contracted the largest supply contracts of any licensed producer in Canada’s cannabis market. Quite simply, Canopy Growth Corp’s products are more likely to sell than those of other companies with similar products. Added to that is the market stability provided through its affiliation with Constellation Brands, a U.S. Based beverage company.
Constellation Brands, although not a producer of cannabis products, is another “safe” company to invest with. Not only have they strongly backed the Canopy Growth Corporation, they have a strong market presence of their own. They are also poised to be an “arm” of Canopy Growth Corp when cannabis products are made fully legal throughout the U.S.
The Cronos Group, also based in Canada, is another, relatively “safe” investment opportunity. Not only do they own contracts for supply in Canada, they also own and have partial ownership in several growers and manufacturers of cannabis and cannabis related products. The diversity of their holdings offers a broader safety net against potential market failures.
Innovative Industrial Properties is actually a real estate trust that deals primarily with the medical marijuana growing industry. They use the “dividend rule”, which provides a cushion against profit loss to their investors. The “safety” of this stock comes in diversified risk, in that they own several marijuana producing properties in the U.S. If one or two of those properties fail, for whatever reason, there is still a potential profit from the others.
Finally, we have KushCo Holdings. This company does not grow or produce marijuana, rather it provides packaging for various products as well as solvents, etc., for the express purpose of creating many cannabis products. Again, with KushCo Holdings, they have diversified enough that the risk involved is much lower than it would be with a company that was wholly dependent on, say, the crop yield or fluctuating supply and demand.
How To Begin
Your next question may well be where you can buy stock for these and other marijuana companies. Of course, if you are already a trader and have an adviser, that should be who you ask. However, there are several online brokers that can help you if you are new to investing. Ally Invest, E*Trade, and Fidelity Investments, to name just a few, are all marijuana stock enabled and offer priceless investment advice.
The best thing to remember is that the more diverse the company’s holdings are, the more likely you will be to see a profit. That is not Always the case, however, so you should seek the advice of experts and research each company thoroughly before you buy.