There’s a better way to invest in marijuana than buying it in ounces


Marijuana needs no explanation. It’s one of the most popular drugs on the planet. It’s relatively harmless, fairly inexpensive, and often makes ordinary things more fun than they should be (or so I hear).

Cannabis is also mostly illegal around the world. Many drug agencies often treat it the same as harmful substances like opiates. Despite the stigma attached to weed, certain states made this psychoactive substance legal or available for medical patients. People with cancer and seizures now have an alternative treatment method that’s low in cost and not full of awful side effects. In places like Colorado, Oregon, and parts of Canada, anyone can go to a store, buy cannabis products, and enjoy their high at home.

This change in the attitude towards cannabis is new, but it’s not stopping businesses from capitalizing on weed legalization. In Washington and Colorado, small, independently owned cannabis farms and dispensaries produce and sell numerous cannabis products. Venture capitalist-backed startups are also developing their own cannabis strains and selling trendy-looking products where permissible.

Now that cannabis-based businesses exist, publicly traded businesses in the sector are popping up on the stock market. At the same time, existing public companies are getting into the legal cannabis space or benefitting from these new laws.

Best of all, you can buy stock in these companies. But should you?

Shutterstock
Shutterstock

Hundreds of risky cannabis companies trade over the counter.

Stocks trading on the over-the-counter exchange are considered “penny stocks.” These stocks are subjected to less regulation than a company trading on the NASDAQ or the NYES. In many cases, you have a chance to see massive returns on these stocks, but you have the same (if not greater) chance on losing all of your money.

Nonetheless, cannabis-related companies still trade on the OTC exchange, including Aphira ($APHQF), Aurora Cannabis ($ACBFF), General Cannabis Corp ($CANN), Cannabis Sativa Inc ($CBDS), and THC Biomed Intl Ltd ($THCBF), among hundreds more. Due to lack of security synonymous with penny stocks, they might not be your best bet.

Innovative Industrial Properties works solely with cannabis-related properties.

The real estate company recently went public on the New York Stock Exchange under the ticker $IIPR. This makes them one of the first cannabis stocks to be publicly traded on a major stock exchange.

Unfortunately, IIPR lost momentum and performed a rather poorly since they went public. Investor sentiment is fairly low in the stock, and it might not be the best thing for you to purchase right now.

Shutterstock
Shutterstock

Public pharmaceutical companies are developing cannabis-derived medications.

Companies like GW Pharmaceuticals ($GWPH), Insys Therapeutics ($INSY), and Cara Therapeutics ($CARA) all have cannabis-related drugs in the works or in various forms of testing. These prescription drugs use the medicinal properties of cannabis to ease pain without the use of opiates.

Now that Donald Trump is president-elect, the pharma industry is doing fairly well on the stock market. This is because a Clinton presidency was associated with fears of increased regulation in terms of drug availability and pricing. If you were to invest in a cannabis-related stock, these companies might be where to start.


If you want to invest in cannabis outside of buying more cannabis, pharmaceutical companies utilizing the plant might be the best place to start. We strongly advise new investors against investing in OTC or penny stocks. Those stocks are risky, more so than stocks on normal exchanges, and you could easily lose your investment in a penny stock without even realizing it.

If legalization of cannabis increases, you should expect to see more companies related to the plant going public. They might not all be good investments, but one company will surely emerge in the next ten years as a leader in the sector. Be sure to keep an eye on future IPOs to get in early.

Most importantly, have fun with your investment. After all, it is cannabis!