Two reasons cannabis stocks could be about to surge and why now is the best time to invest in weed stocks.
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Marijuana stocks are notorious for surging around hype of legalization and other changes to the law, only to come crashing down afterwards. if you look at a chart of GW Pharmaceuticals, a cannabis therapeutics company, the share price shows this cycle of hype and then the crushing letdown. That first major wave of legislation in 2014 put legalization on the ballot in 15 states and took the share rocketing up 153% through mid-2015…only to crash back to earth the next year. The next wave of legislation had a longer-lasting effect on the share price but even that has worn off and the market has again lost interest.
But two factors have lined up that could take cannabis-related stocks back to their peaks, bring that hype back and make investors a LOT of money.
Now could be the time to get back into the theme, before the rest of the market and I’m buying the three stocks we’ll talk about today.
In this video, I’ll share the marijuana stocks news that could move the market. I’ll show you the cannabis stocks fund and why you should invest in individual pot stocks instead of the ETF. Then I’ll reveal my cannabis stocks list I’m buying and why.
The first factor here probably won’t surprise anyone but the outcome will. Democrats are now favored to control Congress and that could lead to federal legalization of marijuana or at least a return to friendly legislation. Medical marijuana will be the first to benefit but we could see nationwide legalization.
The U.S. House of Representatives passed the SAFE Act last September to clarify federal rules on banking for cannabis companies. A lot of the retailers and even larger companies have been squeezed for funding because traditional banks won’t lend so the legislation is seen as a big step but it was dead-on-arrival in the Senate. With a Democratic control of both chambers next year, this legislation is likely to come back and bring a lot of funding to marijuana companies.
Even if this scenario fails to happen though, another factor is lining up to boost cannabis stocks and legalization. State budgets are underfunded by more than $550 billion and legislators are scrambling to fill the gap. Taxes on marijuana companies are as high as 37% above sales taxes and could mean hundreds of millions in lost revenue.
Like in the past, even if the actual outcome of these two factors is less than cannabis investors hope, just the hype and build-up behind it will be enough to drive cannabis stock prices higher for a time.
1:20 Marijuana Stock News
4:17 Cannabis Stocks Index
4:56 Cannabis Stocks List
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Joseph Hogue, CFA spent nearly a decade as an investment analyst for institutional firms and banks. He now helps people understand their financial lives through debt payoff strategies, investing and ways to save more money. He has appeared on Bloomberg and on sites like CNBC and Morningstar. He holds the Chartered Financial Analyst (CFA) designation and is a veteran of the Marine Corps.