What You Need To Know Before Investing In Marijuana Stocks

Marijuana is going through a legalization phase.

Decriminalization of cannabis started in the 70s, culminating in Colorado and Washington becoming the first two states to legalize the substance for recreational use. In 2014, Alaska and Oregon followed and by 2018 there were 9 states in total that regulated marijuana similarly to alcohol.

At the same time businesses are stepping up to fill the demand that is cropping up. The Canadian company Cronos Group became the first marijuana company to list on a major US stock exchange when they started trading on the Nasdaq in February 2018.

Cannabis is going to become big business as the wave of legalization rolls through, estimated to grow to between $50 and $70 billion by 2021. The landscape looks promising with many companies fighting it out to become the next Wal-Mart of Weed.


Some of the biggest players include Scott’s Miracle Gro ($4.8 billion market cap); Canopy Growth Corp ($5.4 billion); Aurora Cannabis ($4.3 billion) and GW Pharmaceuticals ($3.8 billion).

Of the four biggest players however, only one is really making any money. Scott’s Miracle Gro lost $21 million in the last three months of 2017 and GW topped that figure by losing a whopping $46 million in the same time frame.

This is the crux of the problem. Everyone feels like marijuana stocks are about to take off, but that expectation alone has inflated the prices of stocks to the point that they may not be a good play anymore. Few of the companies are making money and people are trading more on hype than on solid financials.

Even Aurora Cannabis which reported net income of $7.2 million on $11.7 million in revenues isn’t as amazing as it seems. Taken at face value, their profit margin of 65% sounds incredible but dig a little deeper and you will notice that their financial statement shows that they counting in their profits $22 million in the form of an unrealized gain (they haven’t sold yet) from derivatives. So it would seem that they are not really making money producing or distributing marijuana.


So do be careful if you’re thinking of investing in a specific marijuana stock.

If it means anything consider the advice of Micah Tapman, a managing director at venture firm Canopy Boulder who is involved in a cannabis startup accelerator when he says that the smart money is in the high-end medical side of the space.

If you’re not sure, you don’t know what to do but you want to get involved, then it might make sense to invest in a marijuana ETF, something like the Horizons Marijuana Life Sciences Index. This ETF attempts to replicate the performance of the North American marijuana market, and helps an enterprising investor diversify while still gaining exposure to cannabis. Their expense ratio is 0.75%, which is on the higher side but you could invest while waiting for competitors to pop up.

Expect to see a wave of new ETFs, and other players pop up in the next years as marijuana becomes increasingly more accepted across the country. A small investment now could pay off big in the future.

January 2, 2021 Update: We have just announced our BEST STOCK NEWSLETTER of 2020 AWARD!

CLICK HERE to find out which stock newsletter was up 78% in 2020 (and whose 2019 picks are now up 113%).

*** Our Award for BEST STOCK NEWSLETTER of 2020 ALERT ***

Updated January 2, 2021

At WallStreetSurvivor, we subscribe to dozens stock recommendation and advisory newsletters. There is ONE newsletter that is constantly outperforming all of the others--The Motley Fool Stock Advisor.

Five of their 2020 stock picks have doubled and the average return of all 24 of their stock picks for 2020 is up 78%!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's 5 years and 120 stock picks. As of Friday, January 1, 2021 the Motley Fool's January stock pick (TSLA) is up 720%, their March pick (ZM) is up 172%, their April pick of SHOP is up 226% and their June pick CRWD is up 120%; and another two have more than doubled. In addition, 10 of their 2019, 12 of their 2018, 11 of their 2017, 15 of their 2016. Most impressively, over the last 5 years that we have been tracking every recommendation, their average stock pick is up 209%--tht means over the last 5 years their stock picks, on average, have TRIPLED!

Now no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super-profitable. The important thing about the Fool stock picks is you have to buy them the day they are recommended because they usually pop 5-10% in the first 72 hours after the release their recommendation. You sure don’t want to risk missing out on their next pick.

Normally the Fool service is priced at $199 per year but they are currently offering a NEW SUBSCRIBER DISCOUNT that allows you to get theiir next 24 stock picks for just $99/year. HERE is the LINK to visit their New Subscriber Discount page.

CLICK HERE to get access to all The Motley Fool’s Stock Picks and their next 12 months of picks for just $99 per Year! 



Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW (before it’s too late)

Comments are closed.