Cannabis stocks have seen renewed enthusiasm from investors thanks to several developments over 2018. Canada’s legalization has sparked tons of interest in several companies. Cannabis stocks are still relatively volatile due to the uncertainty surrounding the United States’ Department of Justice’s stance on not interfering in states where it is currently legal. Here’s a quick guide on choosing the right cannabis companies to get involved in which to invest.
Avoid Penny Stock Cannabis Companies
The federal regulations that prohibit banks from conducting business with cannabis companies also present the same challenges in getting listed on exchanges like NASDAQ or NYSE. Some cannabis companies have resorted to over-the-counter exchanges to conduct business. Generally, these small-time companies aren’t worth the investment since they’re not taken seriously for trading alongside penny stocks.
Look for Great Leadership
If you’re considering investing in a cannabis retail company, you want to make sure the leadership has a pedigree in retail companies. Retail is a beast in itself without the added complications surrounding the federal legality of cannabis. An example of a great cannabis company for investment is Green Growth Brands. GGB is backed by top retail execs, and is focusing on consumer experience as the first and foremost focus for the company. Brands like Meri + Jayne, Green Lily, and The Source cater to different clientele while presenting brand awareness that is required to appeal to cannabis-conscious millennial consumers.
Medical cannabis has been legal in Canada for years, but the looming date of October 17 will mark the first-time recreational cannabis is legal across the great white north. Some Canadian cannabis companies have shown the highest growth in stocks over the last few months as recreational legalization looms. Canopy Growth Corp., Aurora Cannabis, and Aphira Inc. are three companies that are changing the face of retail cannabis.
Brand awareness can really determine the success of a retail cannabis company. Catering to potential markets with the image they expect can go a long way to cementing loyal customers. Any cannabis company you are considering investing in should be aware of the impact of brand awareness and how a diversified portfolio of brands can help the company succeed in the variety of the cannabis market.
Understand that there is more to the cannabis industry than just growing and distributing. The industry is also filled with many people who provide soil, lighting, farming equipment, something you may not realize and really shows the positive impact that cannabis can have on the economy. Biotech firms are researching the potential for medical cannabis drugs and are considered a part of the industry, too. Finding the right company to invest in means you need to be willing to look at several different traditional sectors that may contain a cannabis-based focus and make your decision from there. This spread of investment can be helpful, but make sure to do your due diligence before considering any cannabis investment, as you would for any money move that you make that could potentially affect your nest egg.