Is now the right time to invest in the Cannabis Industry?
As of this year, cannabis is legal in 29 states plus the District of Columbia, and the number is rising.
The Cannabis Stock Index is up 26.4% month-to-date.
~30,000 new cannabis companies have entered the space this year.
There is a noticeable trend here that seems to be pointing towards, yes.
The Spark
Five years ago, Colorado and Washington legalized the adult use of marijuana, sparking what is now one of the fastest growing industries in the U.S.
The industry has since been growing at a 16% compounded annual growth rate.
By the end of 2020, it’s projected to double in size from $22 billion in 2017 to $44 billion.
U.S. Cannabis Industry Total Economic Impact: 2013-2020 in Billions (Marijuana Business Daily)
What was once a taboo is changing the minds of constituents and investors alike.
⅔ of the population is for the legalization of cannabis.
This year alone, 31% of americans will begin living in cannabis-friendly states.
Clearly there is a bright future ahead.
The Problem
The growth is tangible, but the risks are substantial.
Cannabis is still federally illegal and labeled a Schedule I drug.
Some cannabis stocks hoping to make it big still have to wait for this to change.
Those that don’t still have to follow highly regulated state laws and some existing companies are limited in their ability to sell across state lines.
For investors, the opportunities to profit from a legitimate company who sells marijuana products are scarce.
For example, the U.S. Food and Drug Administration has only approved a grand total of three cannabinoid-related drugs: AbbVie (NYSE: ABBV), Valeant Pharmaceuticals (NYSE: VRX), and Insys Therapeutics (Nasdaq: INSY).
As mentioned above, upwards of 30,000 new cannabis businesses have entered the cannabis space this year.
This means a highly saturated market that investors have to shuffle through to separate the good from the bad.
