By John Drachman
You don’t have to be a Dead Head to like marijuana – or even smoke it.
Long-debunked as a highway to hell for juvenile delinquents, the plant’s popular sativa variation has been consistently praised for its ability to “ease nausea caused by chemotherapy” and “reduce the muscle spasms associated with MS.” According to the Center for Disease Control (CDC), this distinctive plant – and cultural novelty – deserves its reputation for being a “pain reliever and inflammation reducer.”
And when a world-renown organization like the CDC likes a medical solution, you can expect the investment world to be not too far. A report from Grand View Research cited “increased legalization of marijuana for medical and adult-use and the growing adoption of these products for the treatment of chronic diseases” as the driving factor behind the cannabis industry’s profitability. Such positive press has cleared the air for growth-minded investors looking to commit to this booming industry. Expected to reach $84 billion by 2028, the market for medical marijuana alone is expanding at a projected growth rate of 14.3% annually from now to 2028.
Best Ways to Invest
Exploratory investors should keep in mind that, just like any other new industry, cannabis can be particularly volatile. While the sector has a long way to go before it’s considered mature, there are three moderate steps investors can take to sample the benefits of marijuana investments while still getting a good night’s sleep.
- Check out the extraction service providers: Extraction companies convert cannabis and hemp biomass into products made from resins, distillates, concentrates, and cannabinoids. Motley Fool’s Sean Williams favors Neptune Wellness Solutions (NASDAQ:NEPT), MediPharm Labs (OTC: MEDIF), and Valens GroWorks (OTC: VLNCF).
- Buy the North American sellers of CBD: CBD is the non-psychoactive cannabinoid best known for its medical benefits. Extracted from the cannabis plant, it’s often abundant in pot’s cousin – the hemp plant. Big CBD retailers include 1,350 Kroger stores and more than 700 Vitamin Shoppes throughout the U.S.
- Spread the risk and index: Why buy one pot stock when you can buy the whole market? Exchange-traded funds (ETFs) with a marijuana focus provide immediate diversification across the entire industry. For the “don’t put all of your eggs in one basket” type of investor, Horizons Marijuana Life Sciences ETF (OTC: HMLSF) could be worth a look: As the first ETF focused on cannabis, it has invested some $500 million dollars in net assets across 60-plus plant-related holdings.
The Bottom Line
Nowhere does “seeing an investment go up in smoke” have more resonance than in the cannabis world. With some hands-on research and exploratory discussions with a professional advisor, you’ll find that even if one or two cannabis holdings go “poof,” the rest of your portfolio will stay rooted to the ground.
John Drachman is a contributing writer to www.myperfectfinancialadvisor.com, the premier matchmaker between investors and advisors. John is an IABC award-winning writer, who applies his 30 years of financial marketing experience toward advancing the dialog between investors and investment professionals.