Investing in cannabis now is often compared to buying Anheuser Busch InBev NV (ADR) (NYSE:BUD) or Molson Coors Brewing Co (NYSE:TAP) stock in the 1930s.
The industry's youth means there are a number of players, not all of which will survive. Within a decade, the market is likely to have a few large and well-established companies, but many others that seem profitable now will fail.
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How do marijuana investors make stock picks?
A more conservative route is to buy shares of an exchange traded fund with exposure to a basket of cannabis stocks. Two ETFs, the Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF) and ETFMG Alternative Harvest ETF (NYSE:MJ), fit this bill.
Choices abound in marijuana equities, from growers like Cronos Group Inc. (NASDAQ:CRON) and Canopy Growth Corp (NYSE:CGC) to cannabinoid-focused biotech GW Pharmaceuticals PLC – ADR (NASDAQ:GWPH) and dispensary operator Medmen Enterprises Inc (OTC:MMNFF). Or you can buy shares of companies servicing the cannabis industry, such as Scotts Miracle-Gro Co (NYSE:SMG).
Read Before Jumping In
It's a good idea to study the industry itself before choosing to invest. Benzinga has compiled a list of five books to read before investing in marijuana stocks. The books aren't just about marijuana stocks, but the industry overall.
"Start Your Own Cannabis Business: Your Step-By-Step Guide To The Marijuana Industry"
By Javier Hasse and the staff of Entrepreneur Media
"Start Your Own Cannabis Business" is co-authored by Benzinga cannabis reporter Javier Hasse. The book covers how to launch a cannabis company, but it can be useful for someone who wants to invest in cannabis companies as well. It explains the industry's inner workings, such as taxation, legal matters and asset protection. It also shares stories from entrepreneurs and industry pioneers.
"Zero To One"
By Peter Thiel
Peter Thiel is well-known in the startup and investment community, being one of the founders of Paypal Holdings Inc (NASDAQ:PYPL) and an early Facebook.com, Inc. (NASDAQ:FB) investor. He has recently become known in the cannabis industry by backing Privateer Holdings, a private equity firm that invests in pot companies. Thiel’s book talks mainly about startups and provides his perspective on what to pay attention to when investing in a new company.
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“The Cannabis Encyclopedia: The Definitive Guide To Cultivation & Consumption Of Medical Marijuana”
By Jorge Cervantes
The encyclopedia explains everything prospective investors need to know about medical marijuana and provides useful cultivation techniques, with plentiful illustrations.
"The Cannabis Encyclopedia" should help novice investors understand marijuana terminology and provide some insights into the operation of companies that specialize in growing the plant.
"Stock Investing for Beginners: Marijuana Stocks: How To Get Rich With The Only Asset Producing Financial Returns As Fast As Cryptocurrency"
By Stephen Satoshi
Satoshi's book covers the essentials of the cannabis industry, provides examples and covers a variety of segments in the sector that are open for investment.
"International Marijuana, 2018 Edition: The No B.S. Guide To Investing In Weed Stocks Globally"
By Peter Hatcher
"International Marijuana" can be a useful guide for novice investors who are looking to enter the cannabis space. It covers many areas, including tips on finding the right brokerage and analysis of the top companies in the industry. Hatcher also shares information on how to research cannabis companies and provides advice on how to develop a trading strategy around cannabis stocks, entry and exit points, swing trading and more. The author also shares important online sources that can help investors as they navigate the cannabis industry.
Bonus: The Grow Bible is a free 70-page e-book that teaches you all you need to know about cultivating marijuana. Robert Bergman, an experienced grower, doesn't only teach you about the best products but also about safety and taking your grow to the next level.
Related Links:
Study: Medical Marijuana Can Help With Behavioral Issues in Autistic Children
Cannabis Stocks Remain Hot, But Might Be Getting Overheated