The Most Important Thing to Know About Investing in Marijuana Stocks
However, investors have learned the hard way since the beginning of April that cannabis stocks don’t go straight up. Following a first quarter that saw more than a dozen popular pot stocks surge by at least 70%, we witnessed more than two dozen cannabis stocks give back at least 20% of their value during the second quarter — and much of this weakness has carried over into July.
This recent drop raises an important point that all marijuana stock investors, and prospective investors, need to understand about this industry (and any next-big-thing investment for that matter). Namely, that every industry, including cannabis, needs time to mature.
I know what you’re probably thinking: That the marijuana industry is already fairly mature since a black market has existed for decades. But keep in mind that the black market doesn’t have to contend with the licensing process for cultivation, processing, or sales, or pay excise taxes as they do in Canada and select legal U.S. states.
Further, illicit cannabis models usually aren’t scalable given the fact that they’re designed to avoid detection by law enforcement, whereas legal-channel weed businesses are pretty much always built to be scaled. The entire process of moving marijuana into a trackable