When you picture yourself in 10 years, what do you see? This is hard to answer, especially for college students. Most would agree they would be working, but for how long is another story. The world is expensive, and if you want to get ahead of the game in saving for retirement or that European tour of your dreams, then you’ll need extra cash. As a college student, investing is an excellent way to build up said cash while simultaneously gaining a vital financial education.
When beginning to invest, there are so many places to put your hard earned money and watch it grow. But, if there’s one market young people should absolutely invest in, it’s weed stocks.
Medical marijuana is legal in more than 40 countries around the world, and recreational use is legal in Canada and Uruguay. In the United States, medical marijuana is legal in 33 states with 10 states, including D.C., legalizing it recreationally.
According to The Motley Fool, a stock market analysis site, global legalized cannabis sales are projected to reach $16.9 billion this year. That number is expected to skyrocket to almost $200 billion quite possibly in the next 10 years as more markets open up and products are created.
These rising numbers bode well for potential investors in the United States, where the industry is already seeing massive growth. It helps that over half of Americans believe marijuana should be legalized, a staggering number that has led to tremors on Capitol Hill.
In 2018, President Trump signed a new Farm Bill, which legalized hemp products, including CBD, and gave benefits to hemp farmers. And, as Politico points out, with Democrats in control of the House of Representatives, there are now 296 members of Congress representing states with at least medical marijuana legalized.
This means there are more than enough votes to pass critical legislation including, clarification of bank rules for funding weed companies, permission for veterans to discuss medical marijuana with their doctors at the Veterans Association and protections for state legal programs.
These changes indicate that the United States is becoming a safer environment for marijuana companies and the sale of their products. Only one conclusion can be drawn from this information: It’s best to hop on the train now. Weed stocks are on the rise, and as more states (and countries) legalize the plant, the market will only get bigger and share prices will increase.
Despite Canada having legalized recreational weed, calculations from Arcview Market Research and BDS Analytics estimate only 12% of global marijuana sales come from our northern neighbors in 2019. Those same estimates place 80% of sales being generated in the United States.
However, because the plant is still illegal at the federal level, the safest stocks to invest in are medical marijuana companies who obtain approval from the Food and Drug Administration. These companies produce cannabis products for chronic pain and inflammatory diseases.
Some even work to produce products for autism spectrum disorders, schizophrenia, epileptic disorders and even amphetamine addiction. On the NASDAQ, share prices for these companies can range from $0.73 per share to $115 per share, according to Investopedia.
One such company, Cara Therapeutics, is a biotech company working on developing cannabis-based solutions to chronic pain by conducting clinical research on products targeting opioid and pain receptors. Their share prices average about $18 per share, with around a 30% return over three years.
More established than Cara Therapeutics, GW Pharmaceuticals is a U.K.-based biopharmaceutical company with a portfolio of products focused on treating schizophrenia, autism spectrum disorder and other conditions. Thanks to attention from Wall Street firms, their stock price reached $143 in June of this year, and their revenue is expected to reach up to $146 million in 2019.
If you’re more connected in the investing world, then you can also find weed stocks in over the counter markets, also known as OTC. These stocks are sold from broker to broker instead of at a large-scale market like the NASDAQ or the New York Stock Exchange because the companies selling the stock don’t match the stringent requirements of the large markets.
The share prices are, on average, much lower but the stocks can pay out dividends because of the emergence of the marijuana industry as a whole. The main risk with these stocks, however, is the fact that many of the companies selling shares are heavily involved in the recreational marijuana weed industry.
For example, Acreage Holdings is a licensing company that oversees cultivation, processing and dispensary operations in states where recreational use is legal. As of this month, their share price is around $6. Because of the uncertainty of federal laws around recreational weed, these stocks aren’t as profitable at the moment.
There are also some weed stocks paying dividends right now. For those who don’t know, dividends are payoffs from investments in the form of either more shares or a cash payout. This is usually an indication that a stock is a stable investment, or at least that it’s profitable for now. AbbVie Incorporated is one such company. They develop marijuana pharmaceuticals, such as Marinol, and have been consistently paying dividends since 2013.
Their next dividend is expected to be paid out in mid-November at $1.17 per share. Not to be forgotten, Scotts Miracle-Gro Company is an investor company that owns General Hydroponics, a gardening supplier. You can guess what kind of gardening they specialize in. Scotts’ last dividend amounted to $0.58 per share last September.
You’ve probably heard the phrase “don’t put all your eggs in one basket.” This is especially true for new investors. The reason young people should invest in weed stocks is because of their future potential, which is one way to diversify a portfolio.
As the legalization movement spreads, prices will go up and stocks purchased now will be worth much more in the coming years. Add in some blue chip stocks, maybe even invest in a mutual fund or two, and you’ve got a great start on your way to a solid portfolio.