Three Ways To Approach The Cannabis Trade – Benzinga

While many traders are looking to tech or pharma for the next big breakout, others are attempting to get in front of the market by trading an industry that is anticipated to grow to $20.6 billion by 2020. While cannabis isn’t entirely legal in the U.S., it’s legal to invest in cannabis companies or those hedging their way into the industry.

Companies in the cannabis business are entering the market at a rapid clip as more and more states in the U.S. move to decriminalize and legalize the drug. As such, many of these companies are open to public investment.

However, with the greater influx of companies and capital into the market, and with the drug’s federal classification as an illegal Schedule I drug, marijuana traders need to be informed about the circumstances behind the companies they trade. In the interest of keeping traders aware of this unique market, I’ve put together some brief notes on three ways an interested trader could approach the cannabis market and what they should know before entering the trade.

OTC Stocks

For those who want to get in at the ground floor of the U.S. cannabis industry, there are dozens of companies who are seeking investor capital. The concern with these companies rests on the fact that, because of factors relating to cannabis’ status as a schedule I narcotic, they cannot qualify to be listed on the major U.S. exchanges.

That’s not to say that there aren’t some, like Terra Tech Corp (OTCMKTS:TRTC) or Weed Inc (OTCMKTS:BUDZ) that have sizeable market caps and strong fundamentals underlying the business. At the same time, there are also a lot of pink sheet stocks that are susceptible to investor price manipulation and even collapse. I advise most traders to be cautious with anything priced

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