It’s true to say that medical marijuana is one of the most divisive topics of the last few years. This was highlighted recently when Elon Musk made headlines by smoking marijuana during a live stream last week. Although the live stream was focussed on innovation and potential for the future, all anyone could remember from it was the cannabis smoking entrepreneur. Unsurprisingly, shares in Tesla dropped drastically over the next 24 hours, while shares in Cronos, the Canadian medical marijuana stock, saw dramatic growth.
There is no denying that the new CannabisCare CopyPortfolio, provided by eToro, is causing excitement within the industry. However, this budding industry may prove to be quite challenging to navigate, as we learn about and begin to understand the pros and cons of investing in medical marijuana stocks.
We are quite pleased to be able to announce the launch of this new Market Portfolio, especially considering that this investment strategy is one that will give investors exposure to the increasingly exciting biotechnology industry. The portfolio will comprise leading North American companies within the industry, including marijuana growers, companies who develop cannabis-based pharmaceuticals, and other relevant and leading companies within the field. Each stock within this portfolio will be given an equal allocation, making this investment strategy one of the most balanced, managed, and fully allocated portfolios with a thematical investment option.
The biotechnology industry is one of the most rapidly growing industries in the world, so you would be forgiven for thinking that this was a strong investment strategy to take. However, analysing the pros and cons of investing in medical marijuana is necessary to complete your due diligence.
3 Pros And Cons Of Investing In Medical Marijuana
|Pros Of Investing In Medical Marijuana||Cons Of Investing In Medical Marijuana|
|Potential Short-Term Gains
Short term gains of investing in medical marijuana seem to be very positive for the growth of any portfolio. In 2017, medical marijuana stocks grew by roughly 90% in America, which shows a positive trend for potential future growth.
|It Is Considered To Be A “Sin Stock”
This would be a personal objection to investing in this industry and linked to the thought process that you do not believe in investing in stocks of companies that cause harm to people. Other examples would be the tobacco and alcohol industries.
The potential growth for this industry is yet to be fully recognised. As more and more states begin to legalise the use of both medical and recreational marijuana usage, there is significant room for growth in this industry.
|Federal Illegality Of Marijuana In America
While medical marijuana has been legalised in many states across America, it is still illegal at the federal level. You could argue that it is simply a matter of time before this industry is fully legalised, however, it is a valid point to think about before you invest in medical marijuana.
|Cost And Growth
A single marijuana plant, which has a relatively low cost to grow, has a potential sales return of 200%. With such a large profit margin, it is likely that we will see more companies breaking into this budding industry, allowing future potential growth in the market.
|An Opportunity Ripe With Fraud
As with most things that are ‘on trend’, or talked about heavily in the news, investing in medical marijuana is ripe with fraud at the moment. Fraudsters are cashing in on the fact that there is not much information about medical marijuana portfolios and targeting people who want to invest early in this new industry.
Any asset that you invest in, including marijuana, is a complicated venture and forces you to weigh up the pros and cons equally before making a move. Marijuana is an elaborate strategy, with added complexity because of legalisation, yet it is potentially high-yielding with unprecedented growth. With more and more states and countries around the world legalising the medical and recreational use of marijuana, there are more and more opportunities for growth in this industry.
The biggest tip and challenge is finding legitimate companies to invest with, and knowing how to recognise the fraudulent investment scams out there. You can always take a conservative approach to your investment portfolio, especially while waiting for the federal government and more countries to legalise the use of medical marijuana. However, it is prudent to keep in mind that as the complexity of this investment opportunity decreases, so do the potential returns it may yield.