Is It Wise To Invest In Cannabis Stocks Now?

By Author: Sativa Bliss Canabis
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In 2021, industry analysts forecasted that sales of legally produced cannabis will increase by more than sixteen percent annually, eventually reaching more than fifty billion dollars. But cannabis sales fell short of projections significantly this year, and the value of certain cannabis equities has dropped by more than fifty percent. As a result, many people are pondering whether or not now is a good time to invest in cannabis. Will sales continue to skyrocket in 2023, or have cannabis stocks not yet reached their lowest point?

Even if the cannabis industry just hit a new record low, it is critical to understand the factors that led to the recent slump in sales and to determine whether or not the market will begin to recover in the near future.

And if you haven't already, now is the moment to consider whether you should invest in cannabis right away or put off your decision until later.

It is nearly impossible to forecast when would be the best time to make an investment in cannabis. But in order to guarantee that you have access to all of the relevant data before you make a choice, we have taken the effort ...
... to lay out what is currently occurring and what the opinions of specialists are regarding the matter.

Some hypotheses regarding why the market went down

When COVID-19 first appeared in 2020, it was a devastating blow to the cannabis industry. Both the health of the population and the economy were put in jeopardy as a result of this. Stocks in a variety of businesses, including the cannabis industry, were negatively affected.

However, the cannabis industry was facing further difficulties. In 2019, when the government had begun the process of developing legislation for vaping, it had already collapsed.

The drop that the S&P 500 experienced in 2020 was quickly made up for after it became clear that the COVID-19 epidemic was coming to an end in 2021. The value of cannabis company equities increased as well, although not to the extent that investors had hoped for.

There has recently been a retreat across the board in terms of market activity, which may be one of the reasons why cannabis stock prices have gone down.

Because of the epidemic, many individuals believed that cannabis sellers would have little choice but to close their businesses at the beginning of the year 2020. To everyone's relief, this did not take place to the extent that many people had anticipated it would.

This is due to the fact that a number of states came to the conclusion that cannabis for medical purposes was a "essential service." Therefore, by the close of the year 2020, there was a rise in the sales of cannabis. People who would have been otherwise reluctant to use cannabis before going to work started using it more frequently since they were staying in. Additionally, because there was more time for people to explore and play with cannabis, many people who had never used it before started doing so.

On the other hand, a rising supply follows a rise in demand. As a result, the price of cannabis has decreased as a result of an increase in supply, which is due to the fact that more individuals are using cannabis as a result of the pandemic and more states are legalizing its usage. The agricultural production of it increased in a number of states across the country.

And as soon as the pandemic was over and people went back to their regular lives, the demand for the plant started to go down. The collision will occur shortly after this point.

Keeping an eye on the years to come

It is possible that in the not-too-distant future, a greater number of municipalities and states will make it legal for cannabis retailers to operate for business. In addition, ballot initiatives to legalize marijuana were successful in a number of states during the presidential election of 2022.

Even though President Biden has not always been the cannabis industry's best buddy, he startled a lot of people in October of 2022 when he issued a plea for government reform of the business.

Cannabis is currently categorized as a Schedule 1 substance by the federal government of the United States. Cannabis stock prices are anticipated to go up if the DEA decides to either deschedule the drug or place it in Schedule III. This is due in part to the fact that descheduling the drug would result in the elimination of the burdensome 280E taxation.

It is difficult to say for certain which of these things will take place in the not-too-distant future. It is essential to have a firm grasp on the fact that an increasing number of people living in the United States are opting to back the legalization of cannabis, and that this trend makes it possible for reforms to be implemented.

So, should you make an investment?

One of the primary reasons why the value of so many cannabis stocks dropped earlier in 2022 is because there has been no recent movement toward legalizing the substance. However, this occurred before Vice President Biden's cannabis pardon was made public. According to the opinions of some industry professionals, making an investment in cannabis companies that are currently trading at a discount could result in future profits.

The prices of the vast majority of cannabis stocks are currently significantly lower than they ought to be. This indicates that now is an excellent time for investors to purchase them at a reduced price in order to capitalize on the potential growth they have over the long term.

The majority of these stocks are held by prosperous companies that exhibit an abundance of potential in the future. For instance, stocks like Curaleaf Holdings and Innovative Industrial Properties are widely considered to be among the cannabis stocks that carry the least amount of risk currently available.

In 2022, these two stocks have achieved a healthy balance between growth and profitability.

If you are interested in making an investment with a long-term perspective, then you should consider looking into cannabis stocks at the moment. However, keep in mind that it could be some time before these stocks start to recover from their recent economic difficulties. To put it another way, it's possible that these stocks have not yet reached their lowest point.

Conduct extensive research into the cannabis industry, just as you would with any other type of investment, before you make the decision to put your money into cannabis stocks.

Make it a goal to invest in businesses that can both boast experienced management and run their operations smoothly.

You should investigate the possibility of acquiring exchange-traded funds if you wish to reduce your exposure to risk. These allow investors to have exposure to a variety of firms under the umbrella of a single ticker symbol. In the event that several of these businesses end up having poor performance, you won't have to worry about your money being lost. This is due to the fact that there will be other businesses that will probably do well, so mitigating the impact of the loss.

Remember, most crucially, that the cannabis sector is currently contending with a number of severe obstacles. Because of this, a lot of potential investors are holding off on cannabis businesses until the drug is legalized.

In order for the cannabis sector to pull itself out of the rut that it has been in over the course of the past year, there are a great deal of things that will need to go according to plan.

The first person in the office of the President of the United States to publicly endorse efforts to legalize cannabis is Vice President Joe Biden. To create a major shift, however, it will be necessary for a greater number of political leaders to stand forward and take action.

In conclusion, would this be a good time to buy cannabis stock?

You should know that the cannabis industry will be facing many challenges in the near future if you are trying to decide whether or not now is the right time to invest in cannabis. If you want to make money in the cannabis industry, you might want to wait until it's federally legalized.

However, share prices are at historic lows right now. Stocks that rise in value over time are said to be a good bet right now, according to some experts, so long as you have a long-term perspective. Even so, it remains impossible to know with absolute certainty when a stock has reached rock bottom.

Do your homework and keep a close eye on the market if you want to invest so you can identify the bottom for the stocks you're contemplating. Getting the help of a financial counselor is a good idea if you can afford one.

You can make a lot of money if you're willing to take risks in an unproven and uncertain market.