How to Invest in Cannabis Stocks

Contributor, Benzinga

Want to claim 6 FREE stocks? Head over to Webull to get started.

In the past 5 or 6 years, cannabis went from a buzzword to a billion-dollar industry.

Between 2014 and 2018, a multitude of cannabis companies went public in Canadian venture exchanges as well as in NYSE and NASDAQ, attracting billions in investments and opening the floodgates to an era of immense growth, media attention and investor excitement often called the “green rush”. 

Late 2019 and early 2020 brought an overall loss of confidence from the investor front, prompted by an unfulfilled promise of profitability from many cannabis operators. The valuation of most public cannabis companies dropped, growth capital became harder to obtain and many companies were forced to make reductions and consolidate with others in order to navigate the bubble burst.

However, the COVID-19 pandemic showed that, while the initial flame of infatuation had pacified, the cannabis industry was here to stay. Facing social isolation measures, most jurisdictions with legal or medical programs declared cannabis an essential product, motivating a number analysts to grant the industry title of “recession-proof”.

Today, cannabis presents itself as a more established industry where expectations have become realistic. As rampant growth becomes secondary to profitability and positive balance sheets, many companies still present huge opportunities for investors of every kind.

Marijuana Stock Movers

Analyze marijuana stocks biggest gainers and losers before you invest.

Want Real Time Gainers? Start a free 14 day trial


Session: Jun 24, 2022 4:00 pm – Jun 27, 2022 3:59 pm
Symbol Open Close Change Change % Volume
Buy SOL Stock – Trade for Free SOL
4.81 5.17 0.36 7.48% 90.47K
Buy GRIN Stock – Trade for Free GRIN
Grindrod Shipping Hldgs
18.46 19.62 1.16 6.28% 30.92K
Buy MBII Stock – Trade for Free MBII
Marrone Bio Innovations
0.98 1.02 0.04 4.40% 29.86K
Buy NEPT Stock – Trade for Free NEPT
Neptune Wellness Solns
1.45 1.51 0.06 4.13% 40.95K
Buy YCBD Stock – Trade for Free YCBD
0.41 0.43 0.02 4.02% 14.03K
Buy CODI Stock – Trade for Free CODI
Compass Diversified Hldgs
22.10 22.98 0.88 3.98% 44.04K
Buy ESE Stock – Trade for Free ESE
ESCO Technologies
67.23 68.67 1.44 2.14% 11.94K
Buy OGI Stock – Trade for Free OGI
OrganiGram Holdings
1.06 1.08 0.02 1.88% 1.80M
Buy ACB Stock – Trade for Free ACB
Aurora Cannabis
1.53 1.56 0.03 1.63% 8.45M
Buy MXC Stock – Trade for Free MXC
Mexco Energy
16.07 16.25 0.18 1.12% 9.46K
Buy PMD Stock – Trade for Free PMD
6.29 6.36 0.07 1.11% 5.09K
Buy TLRY Stock – Trade for Free TLRY
Tilray Brands
3.61 3.65 0.04 1.10% 12.06M
Buy BE Stock – Trade for Free BE
Bloom Energy
18.08 18.24 0.16 0.85% 1.30M
Buy TER Stock – Trade for Free TER
97.12 97.85 0.73 0.75% 1.28M
Buy CGC Stock – Trade for Free CGC
Canopy Gwth
3.77 3.80 0.03 0.66% 3.09M
Buy SMG Stock – Trade for Free SMG
Scotts Miracle Gro
82.27 82.75 0.48 0.58% 41.05K


Session: Jun 24, 2022 4:00 pm – Jun 27, 2022 3:59 pm
Symbol Open Close Change Change % Volume
Buy EAST Stock – Trade for Free EAST
Eastside Distilling
0.74 0.68 -0.06 -7.84% 27.21K
Buy VFF Stock – Trade for Free VFF
Village Farms Intl
3.02 2.90 -0.12 -3.98% 32.48K
Buy HEXO Stock – Trade for Free HEXO
0.24 0.23 -0.01 -3.42% 3.29M
Buy YOLO Stock – Trade for Free YOLO
AdvisorShares Pure Cannabis ETF
5.89 5.80 -0.09 -1.53% 51.35K
Buy MJ Stock – Trade for Free MJ
ETFMG Alternative Harvest ETF
6.50 6.42 -0.08 -1.24% 48.88K
Buy WRLD Stock – Trade for Free WRLD
World Acceptance
124.30 123.27 -1.03 -0.83% 29.72K
Buy ZYNE Stock – Trade for Free ZYNE
Zynerba Pharmaceuticals
1.25 1.24 -0.01 -0.81% 20.16K
Buy CRON Stock – Trade for Free CRON
Cronos Group
3.11 3.09 -0.02 -0.65% 1.22M
Buy SPY Stock – Trade for Free SPY
SPDR S&P 500
390.08 388.18 -1.90 -0.49% 57.12M
Buy GENE Stock – Trade for Free GENE
Genetic Technologies
1.28 1.28 -0.01 -0.40% 10.14K
Buy GHG Stock – Trade for Free GHG
GreenTree Hospitality Gr
3.99 3.99 0.00 -0.01% 5.50K

While smaller companies have delivered astronomic returns (and losses) in the past few years, more established firms have performed steadily. Still, it’s hard to hash out the good companies. So, how can you tell the difference between a legit weed company and a good old pump-and-dump? 

The Over-the-Counter Issue

While multiple states in the U.S. have legalized cannabis for either recreational or medical uses, marijuana is still illegal at the federal level. Of course, this had made it more difficult for most companies to get listed on a mainstream exchange.

Some cannabis business have sought alternative avenues to raise capital. Many businesses have gone public in Canadian exchanges, while others have done so by trading on over-the-counter U.S. exchanges.

This means that many publicly-traded cannabis companies are not subject to the same level of scrutiny that major exchanges and the SEC impose — although those trading on the TSX and CSE are subject to heavy scrutiny.

420 Investor Alan Brochstein seems to differ on this point. “It’s extremely important not to rely solely upon company press releases, as these are typically positive spins,” he says. “It takes a greater effort to read and comprehend the SEC filings, but the effort is worth it, as these give a more complete perspective of the fundamentals.

Take a look at Alan Brochstein’s 420 Investor course, where he shows you his real marijuana portfolio

How to Hash out the Bad Weed Stocks

While it’s always recommended that retail investors do their own due diligence, going over hundreds of filings and corporate documents can be hard and time-consuming. And you probably don’t have access to the resources needed to make an informed assessment of a company.

A safe option is to invest in Horizons Marijuana Life Sciences Index ETF and the ETFMG Alternative Harvest ETF. These instruments make it easy to invest in cannabis stocks that have already been pre-selected by teams of analysts who’ve conducted the necessary due diligence and decided to include certain companies in these ETFs.

Another option if you’re looking to build out your own portfolios is to investment advisors and stock pickers like Alan Brochstein or Jeff Siegel of Green Chip Stocks.

How to Invest in Cannabis Stocks

Investing in cannabis is not limited to growers or retailers.

There are numerous companies providing support services to the industry. There are pharma and biotech companies that make cannabinoid-based drugs. And service and product providers that used to operate outside the marijuana industry have gotten on board since legalization.

The variety of companies that form the industry mean you have your choice of stocks or ETFs.

Step 1: Research the company.

Always start by researching the company or companies you’ll be investing in. Check SEC filings and other documents required by diverse regulatory agencies.

Read the latest news on these companies in site likes Yahoo Finance and Benzinga, and get a feel for the market sentiment using Twitter or Stocktwits.

Step 2: Determine the amount to invest.

As a rule of thumb, never invest more than you can afford to lose. While good research will often lead to strong returns, this will not necessarily be the case. Stocks are volatile and contingencies sometimes unpredictable.

In relation to this point, Brochstein says, “I find many people place too much confidence in just 1 or 2 ideas. In a start-up industry, which is what legal cannabis is in many ways, it’s not easy to pick the winners. If you go back to the late 1990s, a lot of the companies that many expected to be winners didn’t even survive three years. My longer-term focused model portfolios typically have a dozen names in them.”

Step 3: Decide on your timeline.

Deciding on when to buy and when to sell is crucial. Try and figure out what your thresholds are beforehand. So, for instance, establish a rule: “If the stock falls below X or surges above Y, I’ll sell.”

Step 4: Pick a broker.

Once you’ve gone through the initial steps, you’ll be ready to actually buy your shares. You can go old-school, with a brick and mortar broker like Scottrade or sign up for an online broker such as TradeStation or TD Ameritrade. Both options will allow you to buy and sell stocks once you’ve registered and funded your account.

get started securely through Webull’s website
Best For
Intermediate Traders and Investors
1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For
  • Active traders
  • Intermediate traders
  • Advanced traders
  • No account maintenance fees or software platform fees
  • No charges to open and maintain an account
  • Intuitive trading platform with technical and fundamental analysis tools
  • Does not support trading in mutual funds, bonds or OTC stocks
get started securely through Moomoo’s website
Best For
Active Traders
1 Minute Review

Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.

Get started right away by downloading Moomoo to your phone, tablet or another mobile device.

Best For
  • Cost-conscious traders
  • Active and Advanced traders
  • Over 8,000 different stocks that can be sold short
  • Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
  • No minimum deposit to open an account.
  • No chat support
get started securely through Interactive Broker’s website
Best For
GlobalAnalyst Product
1 Minute Review

This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.

Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.

Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.

Best For
  • Price earnings growth valuations
  • Easily evaluate investment opportunities
get started securely through CenterPoint Securities’s website
Best For
Momentum traders
1 Minute Review

CenterPoint Securities is ideal for active traders who demand access to advanced tools and services. While investors and casual traders are likely to be content with the basic offerings of traditional online brokerages, active traders will benefit from CenterPoint’s suite of advanced trading tools. If you value execution quality, access to short inventory, advanced trading platforms, and accessible customer service, CenterPoint is an excellent choice.

Best For
  • Intermediate to Advanced traders
  • High-volume traders
  • Momentum traders
  • Short sellers
  • Unrivaled access to short inventory
  • Flexible order routing for improved executions
  • Discounts for active traders
  • Advanced platform with fast executions
  • Reliable customer service
  • Not designed for beginner or low-volume traders

Step 5: Buy the stock.

This step may sound self-explanatory, but it’s a bit more complex than it seems.

“There are generally 2 types of ‘buy’ orders: market order and a limit order. A market order will execute the purchase at the present market price, while a limit order will only execute if the price falls at or below the limit price. Although a limit price might give an investor a lower price of entry, there is no guarantee that the limit order will execute,” Benzinga’s Thomas Rudy explains.

Step 6: Sell the stock.

Once you feel you’ve generated enough returns from a stock, it’ll be time to sell. Again, you can sell the stock with a market order or a limit order. Use your proceeds to reinvest or just spend them. Life is meant for living!

Step 7: Check out Benzinga’s extensive cannabis coverage.

Successful trading requires information and active engagement. What will help you achieve this? Benzinga’s Cannabis Newsdesk. Benzinga’s Cannabis Newsdesk will keep you up to date with the latest news on cannabis, hemp, and related businesses, as well as provide you with timely analysis of micro, macro and equity markets.

Trading Around a Core

A process that has helped Brochstein perform well in his model portfolios is what he calls “trading around a core.” This strategy takes advantage of the inherent volatility in these stocks. You sell incrementally when the stocks are rallying or buy incrementally when the stocks are declining,” he explains.

“It’s important to make sure that the position deserves to be a holding, but if you are confident in the long-term prospects for the stock, varying your exposure can allow you to ‘buy the dip’ or ‘sell the rip’ and not get left on the sidelines or get buried if the stock moves higher after you trim your position or lower after you add to it.

To be real clear, if you go ‘all in’ on a stock and make it 50% of your portfolio, what are you going to do if it drops further? If you sell out of what you think is a great long-term holding because it has reached a level you didn’t expect, will you then be willing to pay more to buy it back in the future if it never falls?”

Spanish version, “Cómo Invertir en Acciones de Cannabis” on

Related content: