Are Stock Options Limited for Cannabis Investors?

Despite the fact that the legal cannabis industry has seen enormous progress in the past few years, businesses in the sector still face unique challenges that companies operating in other markets usually don’t. The angering and frustrating decision by the DEA to keep the classification of marijuana as a Schedule I drug no doubt deals a blow to the legalization movement and is likely a setback to the revenue growth potential for companies. Worse, it is a slap in the face to otherwise law-abiding citizens whose tax dollars fund and maintain the corrupt agency’s existence. State-by-state decriminalization and legalization can and will lead to more jobs and wealth creation. For the time being, however, investors looking to cash in on the growth of the marijuana industry seemingly do not have a ton of options to choose from. With Gallup Polls indicating that over half of the nation supports full legalization, this should change soon.

Obviously, the legal cannabis industry seems to have the potential to be very lucrative for investors. Sales of recreational and medicinal cannabis in legal states raked in about $5.4 billion last year alone. We’ve reported before that experts are predicting that the legal cannabis market will earn $21.8 billion in yearly sales by 2020. Despite this, there are too few “pure play” stock options in the legal cannabis sector that investors can own shares of at this time. The illegality of cannabis at a federal level and the steadfast unwillingness of financial institutions to provide services to businesses in this sector is a big part of the reason why there is a current lack of high quality cannabis stock options. Much of the options for would be legal cannabis investors are limited to volatile penny stocks. Investing in penny stocks in any sector is a risky play, not just in the legal cannabis industry. While investing in the cannabis industry has been lucrative for many investors, the majority of that return on investment has come from venture or start up capital that helps fund cannabis businesses.

One of the legal cannabis-based companies that some experts are keeping an eye on is GW Pharma (NASDAQ:GWPH). Their product Sativex is a cannabinoid medicine used for the treatment of spasticity due to multiple sclerosis. Another one is Insys Therapeutics (NASDAQ:INSY), although medical cannabis is not their primary focus. While showing initial promise and getting some hype after a bit of growth in 2014, Cannabis Science, Inc. (OTCMKTS:CBIS) was a disappointment to shareholders again in 2016.

Have you invested in any legal cannabis stocks? What were they and was the outcome?