For many people, investing in cannabis seems like an obvious way to make money: not only are cannabis products extremely popular, the market is poised for long-term growth as more regions move to legalize cannabis products for recreational and medical use.
But if you’re a cannabis investor, or are interested in becoming one, you do need to be careful about how you play your hand. Here are three most important tips that can help you succeed in this exciting new market.
1. Diversify Your Portfolio
Diversification is one of the basic principles of smart investing, and it’s something you should keep in mind as you make your way into the surprisingly varied cannabis market.
Since cannabis first became legal for medical and recreational use in parts of the U.S. and Canada, the number of products available has exploded. It is now possible to purchase a wide range of cannabis strains, as well as candies, chocolate, and oils that have been infused with cannabis.
The smart investor will purchase stocks in a wide range of cannabis companies, including smaller firms that are innovating new applications for cannabis. No one knows what the next big wave of cannabis products will be, and as the success of CBD oil proves, cannabis is for a lot more than just smoking these days.
2. Consider Cannabis Tech
When most investors think of the cannabis market, they think of producers. But in order to help producers do what they do best — produce high quality cannabis in a socially responsible way — a whole industry has developed to provide producers with the tools and technology they need to do so.
Cannabis tech can be just as exciting an investment opportunity as cannabis itself. Companies like Ample Organics, which produce cannabis sale tracking software built for your unique business needs, have proven to be immensely popular with cannabis producers across Canada, and prove that the market is hungry for cannabis tech that streamlines the production process.
Cannabis software serves a variety of different needs, and contain a range of essential features including:
- Tracking solutions to help producers stay compliant with regulations
- Integrated e-commerce platforms
- Patient registration tools to facilitate medical cannabis deliveries
- Data tools to enable business planning and growth
Without cannabis software, the industry as a whole would be significantly less profitable, and evidence suggests cannabis tech stocks can offer returns just as robust as cannabis itself.
3. Don’t Expect Massive Returns Overnight
When legalization was first teased in large markets like California and Canada, many investors started touting the economic “green wave” that would follow the opening of legal cannabis markets.
While cannabis has proved to be immensely popular, the medical and recreational cannabis markets have faced the same ups and downs that many other emerging industries see. Things may have stabilized somewhat, but cannabis stocks have not been immune from the general economic downturn that followed the arrival of the coronavirus, and investing in cannabis is definitely not a get-rich-quick scheme.
The good news is that the fundamentals of the cannabis market are strong, and if you are willing to be patient, you will definitely see strong returns in the coming years.
Cannabis is a dynamic market with huge growth potential, so it is no wonder that many investors — particularly young people getting involved in the stock market for the first time — have decided to get in on the action.
The best way to see strong returns, however, is to follow common-sense investing principles: diversify your portfolio, research emerging performers, and be patient.
