How to Invest in Cannabis: From Marijuana Stocks to CBD Startups

How to Invest in Cannabis: From Marijuana Stocks to CBD Startups

From investing in marijuana stocks and ETFs to buying a stake in a weed startup, here's how you can invest in cannabis.

Nov 10

How to Invest in Cannabis: From Marijuana Stocks to CBD Startups
Cannabis

Cannabis

Stock Trading

Stock Trading

Startups

Startups

There’s a reason people have called the marijuana industry the new “green rush” for the past decade or so. The year 2021 was record-breaking for legal cannabis sales, with more than $17 billion in revenue from recreational and medical purchases.

In case you’re counting, there are now 18 states that allow adults to partake in marijuana just for fun. Thirty-seven states have legalized medical use. It’s only a matter of time before the rest of the country joins the bandwagon—and that’s why investing can take your recreational hobby into a potential opportunity to make money.

Some say the weed biz is expected to surge to $84 billion by 2028, which is a 14.3% annual growth rate. To compare, the S&P 500 averages about 10% to 11% returns historically. Investing in marijuana really can light you up. There are even some sources that say weed will 850x in the next three years and become worth more than the GDP of actual U.S. states.

Invest in marijuana stocks

Despite the enormous potential for cash, marijuana is still an unregulated market at the federal level. If you’ve ever tried to use a credit card at a dispensary, you’ll know it’s not yet possible until weed businesses have a federally insured place to store their cash and legally move money around.

Straight-up marijuana stocks don't trade on major U.S. exchanges such as the NASDAQ and the New York Stock Exchange (NYSE). These popular companies are known as over-the-counter (OTC) stocks because they are traded through a broker-dealer network, not on the main U.S. exchanges:

  • Green Thumb Industries (GTBIF)
  • Trulieve Cannabis (TCNNF)
  • Curaleaf (CURLF)

 

Meanwhile, Tilray is a Canadian pharmaceutical and cannabis company traded on the NASDAQ with the ticker symbol TLRY. So you’ve got options.

There’s also the category of what are called “ancillary providers.” These are accessory companies like KushCo Holdings (KSHB) which sells direct-to-consumer and wholesale specialty vapes, accessories, and CBD products. Companies which provide business services, logistics, marketing, and supply chain management to the marijuana industry also count as ancillary providers. One example is ManifestSeven (MNFSF). Both KushCo Holdings and Manifest Seven trade on OTC markets.

Last, you can also check out publicly traded biotech (aka pharmaceutical) companies like Jazz Pharmaceuticals (NASDAQ:JAZZ) which is developing medicine based on cannabinoid science.

Invest in cannabis ETFs

Remember that 14% annual growth rate we mentioned? With a cannabis ETF, you can passively capitalize on the rising tide. Instead of choosing individual stocks, this type of security spreads your investment out through all of the marijuana companies listed on a particular exchange

While robo-ETFs exist for weed, you’ll find that a lot of cannabis ETFs are actively managed. Advisors like to stay abreast of mergers, acquisitions, and industry news that can flip things on their head overnight in a rapidly changing regulatory landscape such as cannabis.  

The platform Stash offers cannabis ETFs with a minimum investment of $5. Fees for Stash range from $1 per month to $9 per month based on how active you are and how much money you’re throwing around.

stash

Stash

4.3

Stock Trading

Invest in cannabis REITs

If cannabis ETFs are the passive investing option for marijuana companies, cannabis REITs are the option for real estate. 

REIT stands for “real estate investment trust,” and they work like this: A corporation elects to become a REIT (and taxed accordingly), then raises money from outside sources to develop and operate its properties.

Industry-wide REITS involve this same process, only for a particular sector. Compared to buying and selling individual stocks, which require you have a “green thumb” of investing—aka a killer instinct, good information, and opportune timing—REITs present a more passive option to generate extra income. And since real estate almost always goes up in value, REITs are not the riskiest option in the toolbox. 

Take Nico, for instance—a hyper-local neighborhood REIT platform that lets people turn a minimum $100 investment into long-term financial stake in their communities. Through the platform, users can own both a share of a property in their neighborhood, plus a share of the income generated through however the property is used.

nico

Nico

5.0

Real Estate

REITs work the same in theory across all industries. So with a cannabis REIT, you might help fund sale-leaseback transactions and/or real estate expansion loans that allow cannabis companies to access land and property for their business.

Examples of cannabis REITs include Innovative Industrial Properties Inc. (NYSE: IIPR), Power REIT (NYSE: PW), and Zoned Properties Inc. (OTC: ZDPY).

Invest in cannabis startups

Last, but not least, you can invest in marijuana startups. Sector-wide startups in this industry are in need of funding as they navigate confusing regulation and increasing demand. Needless to say, it’s a good time to get in on the investment when even state governments deemed dispensaries as “essential” during the pandemic.

Crowdfunding platforms for small businesses and startups is one helpful way to invest in cannabis and help cannabis companies gain funding. 

The platform Mainvest lets you put money into businesses that, in turn, agree to share a percentage of their revenue each quarter with you. There’s a minimum investment of $100, and investors often access anywhere from 10% to 25% ROI.

mainvest

Mainvest

5.0

Lending

Currently, Mainvest includes startups like the Massachusetts-based cannabis facility, Eastcoasterdam and the woman-owned edible company, Loud Girl Goodies.

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