Pot Profit: How to Make Money on Marijuana Stocks

marijuana stocks

If you’re an investor, you’re always looking for the next hot business that’s poised for major growth. The earlier you can get in, the more you stand to make. Have you considered investing in one of the biggest, newest businesses that’s growing like wildfire?

That business, of course, is the legal marijuana industry. Just 10 years ago, the idea of investing in marijuana stocks would have invited laughter. But now, the marijuana industry is growing so fast that it seems foolish not to invest.

By 2027, spending in the legal cannabis industry is projected to reach $57 billion. Recreational use will account for about two-thirds of the spending, with medical marijuana making up the rest.

Wondering how to become a marijuana investor and make a profit off of this growth? We’ll help you get started. Keep reading for our step-by-step to become a marijuana stock investor!

1. Do Your Research

The first step for any new investor is to start researching the industry and different companies to invest in. For a marijuana stock investor, this step is even more important.

It’s a quickly changing industry, since legalization is so new, and the laws are rapidly changing. To succeed with weed stocks, you’ll need to become passionate about keeping up with industry changes.

You can start by learning about the different products that cannabis companies sell. First off, there’s both recreational and medical marijuana. There are lots of different products within those two categories, too. For example, in addition to the smokeable flowers, consumers can buy edibles, extracts, and more.

There’s also the CBD industry. CBD is what gives the marijuana plant its medical properties, and it doesn’t have any psychoactive effects. Some companies have made strains or products that isolate CBD, for people who want to reap the medical benefits of weed without feeling high.

The more you understand the industry, the better your choices on where to invest will be. Take plenty of time on this step before moving on. Remember to research other countries, too — you might want to learn how to buy Canadian marijuana stocks, too.

2. Decide Your Risk Aversion

Some investors are very risk-adverse, while others are risk takers. Which kind of investor will you be? This will help guide your investing choices.

The marijuana industry overall isn’t inherently risky. However, you can make risky choices when investing in marijuana stocks.

Are you willing to risk losing some money on the chance of a massive reward? Or would you rather play it safe and minimize the loss potential, even if your gains are likely to be smaller?

There’s always a little bit of risk in investing. But if you understand your risk inclinations, you can make choices that will maximize your success. For example, if you know you’re likely to panic and sell if your stocks drop just a little bit, you might choose to only check prices once a month so you won’t be so reactive to small changes.

And some stocks in the marijuana industry have more risks than others. If you’re a risk taker, you might be more likely to invest in a small but promising marijuana startup, rather than a large and growing company.

3. Choose Your Stock Type

Now, it’s time to narrow down exactly what aspects of the industry you want to invest in. Of course, a few different stock types might make your investment list, too.

Will you invest in the growers who produce the marijuana plant and develop new strains? Will you invest in pharmaceutical companies that are working to make new medical marijuana solutions? Will you invest in the companies that turn the plant material into fun consumer products, from gummy edibles to CBD bath bombs?

There are plenty of other types of marijuana stocks, but these are some of the major investment opportunities you’ll come across. It’s best to focus on the aspect of the industry you know most about, or are willing to learn most about. For example, if you’re interested in pharmaceuticals, you might want to invest in some biotech firms.

4. Make a Budget

By this point, you should have a list of a few companies you’d like to invest in. Before you buy these cannabis stocks, you should decide how much money you’re working with.

If you don’t budget first, it’s all too easy to get excited about the possibilities and spend more than you should. But there’s one rule you should always follow when investing: don’t invest more than you can stand to lose.

No matter how carefully researched your decisions are, there’s always a small chance that you’ll lose everything you invest. If you budget money that you can afford to spare, you can ensure that those losses won’t devastate you.

5. Buy Your Stocks

Congratulations — you’re now ready to become an official marijuana stock investor! Make some purchases from your list of companies you want to invest in.

You don’t have to spend your whole budget right away. If you feel you need more time to research, take it. And make sure to diversify your portfolio — don’t place all your funds in one promising company. Make adjustments to your portfolio as the industry changes, and as you learn more.

6. Watch Your Growth

Now, it’s time to monitor your stocks and watch the changes in the marijuana industry overall.

Stock investing is usually the most rewarding over the long term. The longer you can keep your stocks in a business, the better. You don’t want to react to small changes. That said, since the marijuana industry is new, it’s good to keep an eye on things. If a drastic change happens to a company you’ve invested in, you might want to take action.

Ready to Put Your Money in Marijuana Stocks?

Marijuana stocks are a great way to grow your money and get in on the ground level of a booming industry. Don’t wait to become a weed investor — the sooner you start, the more earning potential there is.

Looking for more ways to take control of your financial life? Don’t miss this guide to managing your freelance finances.

Author: IzzyWeb