Investors Eye Marijuana Stocks

It’s being called the “green rush.” Amid a series of pro-marijuana reforms set in motion by the November election, investors are scrambling to buy up stock in a variety of cannabis companies, which are part of an industry expected to cross the $25 billion threshold by 2021. 

Of course, not everyone is going to win out big in this, but there will be firms who succeed. Those that do will not take for granted sound legal advice needed to navigate an uncertain statutory landscape. Yes, there are state laws that now allow for both medicinal and recreational pot, but there are tight regulatory frameworks within those. Beyond that, while the federal Justice Department backed off its crackdown on marijuana dispensaries as of 2013, the drug remains a Schedule I narcotic, and the new U.S. attorney general is no fan of marijuana reform.

Still, investors see opportunity, particularly when they may not personally be directly involved in the actual cultivation, processing and distribution of the drug. Landlords and property owners may still be at risk, but they also stand to make substantial profits. 

There are a number of different profit projections being floated around with regard to the marijuana industry, but all are on board with the assertion that marijuana is poised to be a multi-billion dollar growth industry. Sales of marijuana in North American neared 7 billion last year. That was up a whopping 30 percent from the year before. Some researchers opine that by 2020, we could surpass the $20 billion mark. Some estimates have it reaching as high as $30 billion, which would mean there would be about 35 percent annual growth in the industry over the course of the next five years – which is not outrageous when you look at the upward trend. Further, long-term estimates are the industry could reach $50 billion by 2026, which California being a huge driver of that growth.

In fact, our L.A. marijuana attorneys understand that California alone is expected to triple the market. That assumes of course the federal government legalizes the drug for recreational use by then. Despite the fact that some politicians are still dragging their feet on this – and we are certain to see some setbacks – the overall trajectory is headed that way. As of right now, 28 states allow medical marijuana and six – including California – now allow recreational sales and possession.

As for investors, the opportunity isn’t unlimited. Over this next year, those hoping to buy stocks may not have a ton of options. That’s because for right now anyway, most of the industry is comprised of smaller firms, and a lot of those aren’t traded publicly at the moment. Those companies that are being publicly traded are being traded off the big Wall Street exchanges, where there is concern about fraud.

Most of the above-board stocks being traded at this point are drug manufacturers who are conducting research on marijuana oils and other derivatives, which can be used to make various chemical compounds. These companies are aiming to develop treatments for specific conditions, such as epilepsy, cystic fibrosis and systemic sclerosis. But even these companies aren’t without risk.

If you are considering entering the marijuana industry, it’s best to first discuss your options with an experienced marijuana business attorney.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.

Additional Resources:

Here’s How Big the Opportunity Could Be for Marijuana Stocks, Jan. 14, 2017, By Todd Campbell, Fox Business

More Blog Entries:

Cannabis Surveillance Systems Are Growing Industry, Jan. 6, 2017, L.A. Marijuana Attorney Blog