The cannabis industry is a hot topic for investors as more states legalize and relax their cannabis laws. Historically, cannabis has a rocky past due to ongoing stigma and propaganda stemming from the War on Drugs.
Now, the climate has shifted, and more people on both sides of the political arena advocate for cannabis legalization. This shift in public opinion is the driving force behind the windfall of states legalizing cannabis and pushing for federal legalization.
Cannabis Investment Trends
Over the last few years, the demand for cannabis has grown exponentially. However, cannabis has some shortfalls that investors should be wary of. For example, cannabis is heavily taxed and regulated in areas such as California, making it difficult for some cannabis businesses to turn a profit.
Additionally, some areas are seeing an influx of large grow operations, causing a surplus in product and extreme price drops.
However, not all cannabis businesses are struggling, and many of them are seeing substantial growth. Successful cannabis companies, including Amplify Seymour Cannabis ETF (CNSB), AdvisorShares Pure Cannabis ETF (YOLO), and The Cannabis ETF (THCX), all saw excellent performance growth over the past year.
Cannabis Expansion
Areas that have legalized cannabis are seeing a lot of growth to the point of leveling out. However, for continued growth and expansion to happen, the cannabis industry will require further legalization and medicinal research.
Cannabis Legalization
Many states have legislation in the works to legalize cannabis on some level. State legalization will allow new and established businesses to expand into new areas. However, for cannabis to reach its full potential, it needs to be legalized on a federal level.
Currently, the Food and Drug Administration (FDA) classifies cannabis as a Schedule I drug. Due to this classification, cannabis businesses miss out on many federal tax breaks. In addition, banks are federally regulated, and most of them refuse to do business with the cannabis industry.
Thankfully, there are financial institutions such as Bespoke Financial that specialize in financing options for cannabis businesses. Through Bespoke Financial, cannabis funding is much easier to obtain.
Meanwhile, several pieces of legislation have been introduced in Congress to legalize cannabis federally. As a result, the question of legalizing cannabis is no longer a matter of “if” but “when.”
Cannabis Medicinal Research
The shift in public mindset began with the medicinal potential of cannabis. In 2013 the country became captivated by the story of Charlotte Figi, a little girl with a rare seizure disorder who was successfully treated with cannabis oil.
Charlotte’s story launched the demand for more cannabis medicinal research. Additional research is still developing; however, many early studies show promising results that can help further the growth and demand for cannabis.
Cannabis Market Projections
Cannabis is showing promising results in the medicinal industry, which is creating more public acceptance. As support for cannabis legalization grows, the current legislative proposals could get put to the forefront of Congress’s agenda.
Now is a good time to invest in the cannabis industry. However, not all cannabis stocks and investments are a sure thing. Due diligence is required before investing in any cannabis business.
