Cannabusiness

investing-cannabusiness-printing-money-war-on-cannabis-prohibition-280x175, Source: http://www.weedist.com/wp-content/uploads/2013/03/printing-money-war-on-cannabis-prohibition-280x175.jpg

There’s no doubt about it, the green rush is here. And Americans of all backgrounds want in on the action. For those unable or uninterested in launching a new business venture, buying stock in cannabusinesses is the best bet for cashing in on the opportunities at hand. But investing in any business is risky and since a big part of the industry remains illegal on the federal level, these risks are greatly enhanced when investing in a cannabusiness.

Many cannabusinesses are just toddlers operating in unchartered territory. So even when everything is looking up for them, no one can really say what business strategies will work in the emerging legal cannabis market. Therefore, cannabusiness stocks are valued in a highly speculative fashion and are at a great risk of being over-valued when they become a hot topic in the industry.

And for investors not used to playing the game, such hype can beget impulse buys. And such mistakes can be expensive. For example, after Medbox was hailed a major player in the emerging legal market  the value of their stocks shot up over 4,000 percent (fetching more than $200 a share after the historic votes in Washington and Colorado) as investors rushed in to stake their claim of the profits to come. But today, the company’s shares have settled at around $26 each as their operations cannot grow as fast as the excitement of investors. Investors who purchased their shares at inflated prices could have lost substantial amounts of money as the hype died down.

Medbox MDBX - investing cannabusiness, Source: Charles Schwab

Source: Charles Schwab

As the industry expands it will be easier to spot good investments. But for now, investing in cannabusinesses remains a high-risk scenario for everyday Americans. For a more in-depth look at this topic, checkout this article by Daily Finance.

Categories: Cannabusiness, Features
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By: Mercedys. Permalink: permalink Shortlink: http://weedi.st/xZ7K4