Are Weed Investments A Good Idea Right Now?

Until federal legislation is passed that makes investing in weed more stable, the trajectory of the market looks uncertain for the foreseeable future.

Recently, cannabis stocks have gained and lost a great deal of value over a short period of time. This activity began when Congress announced that the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act would be voted on soon on its floor.

In light of this announcement, as well as the fact that more and more states are legalizing recreational marijuana, one might wonder if investing in the cannabis sector is a good idea.As a result of the market dip Monday, investors are beginning to realize that marijuana stocks might not be the safest investment. Cannabis legalization is gaining momentum every year. Is now a good time to invest in weed? And if not now, then when?

Marijuana stocks: Are Americans ready to invest in cannabis stocks?A growing number of states have legalized marijuana for recreational use. Cannabis businesses will grow, and the industry will grow overall. As a result, many cannabis companies should see their profits rise, or at least one would think so.

In response to the recent increase in states legalizing weed, Jason Spatafora, co-founder of MarijuanaStocks.com, told U.S News that he wouldn’t see any money from them for a while. Eventually, the recent legalizations for marijuana will benefit the market, but single state legalizations do not make as much of an impact on Wall Street as one might expect, especially without federal backing. Herein lies the purpose of the MORE Act.

In Forbes’ words,

“Before any significant institutional investments can be made, federal legislation must be passed that allows cannabis companies access to U.S. banks.”

In short, the cannabis industry needs to be able to conduct business with banks, which it currently is not able to do.

Cannabis stocks might become more stable and legitimate if the MORE Act passes.
There are few chances that the MORE Act will quickly become law, despite Congress putting it to a vote. The vote itself seems to be purely symbolic.

According to Barrons,

“…we expect the MORE Act to pass the House once again, but it does not have a path to passage through the Senate,”

BTIG strategist Isaac Boltansky wrote in a research noteBTIG strategist Isaac Boltansky wrote in a research note

With a vote, there is a possibility of sparking much-needed debate and discourse, however, it will probably fall short of the federal legislation the cannabis industry requires to become more legitimate.
It doesn’t mean cannabis stocks should be completely ignored just because they are not currently as stable as other more established industries. There are some who believe it is the perfect time to get into the cannabis business at the ground level.

According to NASDAQ,

“Investors may think now is the time to get out of cannabis stocks, but falling shares provide a chance to lock in a low price before things eventually bounce back.”

If you are confident in marijuana’s future, now might be a good time for you to invest in the companies you support. Does NASDAQ have a rule of thumb? Choose companies with growing revenue and profit margins.

The current state of investing in weed seems a bit risky, but its future looks bright. It is expected that by 2030, the cannabis industry in America will be worth upwards of $100 billion. However, the industry itself is on a path to great success despite the current stock market difficulties. An investor needs to be at peace with the fact that there will be highs and lows over the next few years.

In the current cannabis market, be cautious and keep in mind that ebbs and flows are inevitable. In reference to the extreme highs and lows of marijuana stocks, Next Advisor wrote that investors may be shocked by the extreme volatility in their portfolios.

Investors in weed are in for more roller coaster rides in the future. Investing in cannabis may remain a risky venture for the foreseeable future, or at least until there is significant federal legislation that makes it a more stable investment. It may still be a good time to buy if you believe in the product or the company that has stock available. Don’t forget that investing in weed today is a long-term investment. It’s a marathon, not a sprint.

You might also like: Cannajobs