As cannabis consumption and purchasing becomes more widespread throughout North America, the value of the legal cannabis industry isn’t the only thing that is skyrocketing. Investment activity is permeating all areas of the cannabis industry, with many early investors seeing some attractive returns. Moreover, cannabis consumer spending is expected to see gains of 40% this year, tempting investors further to add cannabis to their portfolios.
Investors have already placed a significant amount of capital into the industry… to the tune of approximately $1.23 billion within the first five weeks of 2018. This figure was registered by the Viridian Cannabis Deal Tracker and it is sure to increase significantly for 2019. Compare it to the $178 billion of investments that the industry received within the first five weeks of 2017 and the 600% growth in cannabis investments.
Cannabis reform is contributing to an ever-growing list of publicly listed cannabis companies. However, volatility is suffused throughout the current state of the cannabis market. Government crackdowns and existing lack of federal support for legalization in the U.S. may unexpectedly propel investors into panic mode at any moment; prompting them to shift money elsewhere.
The risks shouldn’t discourage you from making an investment into the industry. Established companies could present an opportunity to secure a long-term, progressive growth amidst the volatility that comes with cannabis investing.
Cannabis Investing is Becoming More Common
Widespread cannabis legalization has enabled cannabis to gain recognition for its potential medicinal benefits, which range from pain and arthritis relief, to relaxation, anxiety management and even as a potential treatment for palliative care.
Moreover, cannabis has emerged as a popular substance for recreational leisure. Combined, the industries present an alluring investment, with analysts predicting the industry will pull in $57 billion by the year 2027.
In 2017, a Statista survey found that 19% of respondents had invested in cannabis companies. Some of those companies are closely involved with processing or distributing the plant itself, whereas others even come into close contact with the plant. The diversity of investment options is an indication of the potential that comes with cannabis investing. By the close of 2017, cannabis retail and cultivation investments topped $236 million.
With the recent passing of the Hemp Farm Bill in 2018, investor opportunities are expanding. This will further bolster development in various areas of the industry, such as agriculture technology, ancillary products and services, biotechnology, cultivation and retail, consulting services, products and extracts, industrial hemp, organic farming, and much more.
Consequently, cannabis stock volatility is likely to continue as the legal landscape evolves. It’s inevitable for an industry undergoing such radical transformation.
Medical and Recreational Cannabis are Two High-Growth Investment Sectors
Canada is currently paving the way for complete cannabis legalization, having recently passed the long-awaited “Cannabis Act” or “Bill C-45” on October 17, 2018. A Deloitte report revealed how Canada’s legal recreational cannabis market could generate $4.34 billion this year.
If the U.S. follows in Canada’s footsteps, the nation could yield $75 billion by 2030, according to Cowen & Co. Canada’s cannabis market is expected to completely eclipse its medicinal cannabis market as a result of legalization, fueling a strengthening industry that is attracting investors from different avenues.
Nonetheless, companies like Nutritional High (NH) are capitalizing on the rise of cannabis-infused products across North America. With legalization for this segment of products in the works in Canada, the company has signed agreements in Colorado, California, Nevada, Oregon, Illinois, Washington, and Canada to produce and distribute cannabis infused infused products.
The Best Investments Can be Created By Volatile Markets
In spite of the volatility that is attached to cannabis investing, huge opportunities can arise even when stocks are tumbling. That’s not to say that you must invest when a cannabis stock is declining. Rather, place a focus on established companies with properly established fundamentals.
Using NH as another example, the company’s Chief Executive Officer (CEO), Jim Frazier, boasts 23 years of experience in the food industry. This knowledge has been incredibly important as the company’s branded products are heavily focused on the edibles (food/beverage) segment. The rest of the Nutritional High executive team is also well-versed in other arenas of the industry, creating a well-rounded wealth of knowledge.
Being thoughtful when investing in cannabis stocks could mean the difference between a safe and an unsafe investment. Sidestepping risk is possible when you track down established companies that understand how to navigate the waters of a volatile market.
Nutritional High is one of many leading Canadian cannabis companies that have demonstrated an understanding of the market. Based on the trends to date, investing in well-established cannabis companies can yield significant returns.