Oh cannabis, our home and native plant! If you love weed so much that you want to sing about it to the tune of a national anthem (no, not ours), then chances are you've somehow considered making money from it. Whether you've contemplated opening your own dispensary or half-seriously started planning out your life as an illegal grower and distributor after you got your tuition bill pre-legalization, it's obvious that you know marijuana is a solid investment for earning cash.
But have you ever thought about weed as an actual investment? While investing in cannabis may seem too good to be true, it's actually a surprisingly available option on the stock market. This is great news for marijuana enthusiasts! Cities that have legalized recreational marijuana, like Seattle, Portland, Denver, and Los Angeles, are projected to bring in more and more revenue each and every year, and it's time for us ? the consumers ? to get in on the profit. But before you start calculating how much green you want to invest in green, let's take a look into the market and trading game.
If you're anything like me, you found out that marijuana companies were open to public investors and got really excited for a second. Then you looked at your cat and said, "How does investing work?" While I'm not qualified to give you a detailed explanation on the joys and troubles of the stock market, I've certainly done enough research to help you clarify your options for investing in cannabis.
Most public cannabis companies are available for trading on the over-the-counter (OTC) market. This is because smaller public companies (like most marijuana companies) are often unable to meet the requirements of formal or major exchange listings. OTC stocks, also called unlisted stocks, are instead traded by broker-dealers communicating directly with one another through a dealer network (as opposed to major stock exchanges, which are described below).
Investing in OTC
Investing in an OTC stock is a relatively straightforward process. Say, for example, you want to look into investing in Leafbuyer (a commendable decision based on their positive growth history). Start by going to a reputable finance website that is able to track stock exchange information and type in the company's symbol or code. For the purpose of this example, I have decided to use Yahoo Finance and type in the company code LBUY.
Once the company's stock profile is in front of you, take a look at the different options available. You can view a summary of the company, an interactive chart of the share prices, conversations that people are having, market and trading statistics and history, the company's profile and financial information, and major and institutional shareholders. And of course, there is the option to buy shares or to sell them. While this may seem like informational overload, this is all important data to consider before investing in a company.
A Word of Caution
As an investor, you won't see much of a difference in the investing and trading process between your OTC and major stocks. However, you will want to keep in mind that OTC networks are less transparent and less regulated than the formal market, which puts you at some additional risk.
You won't see most cannabis companies on major stock exchanges like NASDAQ or the New York Stock Exchange. These markets are relatively exclusive and often include listing requirements that companies must meet, such as initial stock price, number of shares and shareholders, and total market value. While that doesn't mean there are no marijuana companies listed on the major markets, they have historically tended to be therapeutic or pharmaceutical companies. If you're looking to invest in the cannabis industry itself (and not just how Big Pharma will use our beloved flower to steal money from patients), you will be better off focusing on OTC stocks for now.
Where to Begin?
In 2016, a major stock Chief Investment Strategist for NASDAQ explained why investing in cannabis was not a great idea. A lot has changed in the past two years, but the stock market can still be a volatile place, especially for marijuana investors. In order to find some peace of mind, as with all investments, you want to make sure that you have a decent amount of trust in the company you're investing in.
Our advice should come as no surprise: Do your research. Find a company that you believe in, understand what it offers, review its stock history, and consider how much you would be comfortable investing. If you decide to invest in Leafbuyer, great! But even if you're not quite ready to dive into investing in cannabis, we will still be here to make sure your other marijuana experiences ? from learning to shopping to using ? are the best they can be.