Reading time - 7 minutes - July 13, 2021
If you’ve ever had a mate who’s decided to get into stocks, then you’ll know how agonisingly jarring it can be when they announce something like… “dogecoin shares are about to go up guys, you’d be an idiot not to invest”. Nonetheless, people make a lot of money from smart stock investment, or even, from easy stock investment. However, people also lose a lot of money in stocks. Whilst some stocks are hard to predict, others are a pretty safe bet. But what about weed stocks? The marijuana industry is growing around the globe as more countries are legalizing both medicinal and recreational cannabis. Therefore, is this something you should be investing in? Today, we’re going to be delving into the gritty, slimy world of stocks and discuss whether the weed industry is worth investing in. As always, strap yourself in. Let’s go.
This might seem like primary school chat for some of you investment bankers out there, but there’s nothing wrong with recapping on some definitions now and then. Stocks, or in America’s words: shares, are the parts that make up a firm or company. Owning one stock means that you own that little bit of the company. The more stocks you own, the more you own of that company. A company can give out or sell as many shares as they want, but they will all be a percentage of the company. For example, 1 share in a company of 1 million shares will mean you own a 1 millionth of the company.
Good question. Well, let’s imagine an example. A new social media company called ‘MeetUp’ is created in 2021. Joe Bloggs, our trusty made-up investor, buys £100 worth of stock. This gets him, let’s say, 500 shares in the company. That means that when he bought these 500 shares, the price of 1 share cost 20p. Quick maths. Now let’s say in 10 years time MeetUp has boomed, millions of people use it, and it’s more popular than Instagram. Joe Bloggs looks back at the price of 1 share for the company and realises it now costs £20 to buy 1 share. Which means, his measly £100 investment is now worth £10,000. That’s a profit of £9,900. Not too shabby, eh?
Trends are things that become popular. For instance, Facebook was a trend, Amazon was a trend, Bitcoin was a trend. Now, obviously, it’s not easy to predict trends. Whilst it’s easy now to say: “well of course Facebook was going to become popular”, in 2005 it was not easy to genuinely predict that. It’s always simpler in retrospect. But the truth is, the world of marijuana is increasing in value. So, should you invest in weed stocks? Or have you missed the boat?
The weed industry has been steadily growing in value for years now. As more countries begin to legalize and nationalise cannabis, producers have been able to flourish and take the place and capital from the illegal drug market. Here is a list of places and an explanation of how the weed industry has been booming:
Although the UK’s stance on cannabis has been more stagnant than an ice sculpture, in recent years, there has been some slight hot sun to melt the ice a tad (do you like that metaphor?). Since 2018 some medicinal marijuana has been made legal in the UK. Not only that, but CBD products are now available to purchase in many high street shops. This means that the CBD market is definitely booming; at its current rate, the market is worth £690 million a year in the UK. This is a third higher than it was in 2019. Therefore, as you can see, a major increase and an obvious trajectory. Especially as, a few years ago, CBD wasn’t available to buy anywhere near as easy.
However, medicinal marijuana is currently not available on the NHS but is instead available privately. Which, of course, is very expensive. Some people pay up to £50,000 a year for a medicinal cannabis prescription. Although this is terrible for those who need it, this could prove to be prosperous for those with shares in the company that produce medicinal marijuana in the UK. But, that said, until the UK allows medicinal marijuana to be more accessible, weed stocks may remain somewhat stagnant. But is the boom of the likes of Amsterdam or California still to come?
Want to find out more about the UK and cannabis? click here.
As with all investments, it’s always important to do your own research; check other people’s opinions, check their history, check their potential future. But here are a list of companies to keep your eye on in the UK:
The USA is often quite difficult to discuss because it’s literally made up of 50 states, all with varying opinions and laws on the subject of cannabis. However, in states like California, both recreational and medicinal marijuana have been made legal. And other states look to be following suit. According to a recent statistic, America’s legal marijuana market is looking to reach a worth of $70.8 billion by 2028. It is expected that this market is going to expand at a CAGR of 26.7% from 2021 to 2028. What does CAGR mean? Good question. CAGR stands for Compound Annual Growth Rate, which basically averages out a percentage of growth over a period of time. So, essentially, it is predicted that the market will grow – on average – 26.7% a year from 2021 to 2028. Maybe it’s time to invest in weed stocks?
Want to learn more about cannabis in the US? Click here.
Here is a list of companies to keep your eye on in the USA:
Europe again, like America, is a large area with lots of countries with varying opinions on cannabis. Nonetheless, two of the most prominent countries leading the charge for a more relaxed stance on cannabis are: the Netherlands (obviously) and Spain. On the whole, however, Europe as an entity is moving slowly towards legalizing, at least, medicinal marijuana. Recreational, perhaps, will move a little slow. It is estimated that in 2019 the European cannabis market was worth just under $4 million. But by 2027, it is expected to increase to around $37 million. This means a CAGR of around 29.6% from 2020 to 2027. Again, another example of how the cannabis market and weed stocks are booming in all areas of the world.
Want to learn more about cannabis in Europe? Click here.
Here is a list of companies to keep your eye on in Europe:
Now you know a little more about the cannabis market, weed stocks and the situation in some of the major parts of the world, the question is: how the heck do I invest? Well, investing is sort of similar to betting, there’s apps for it. Our personal recommendation would be Trading212. It’s free and very easy to use. Another great thing about Trading 212 is that you can invest with pretend money. So why not first try investing with fake money and feel your way around some of these cannabis companies.
Well, there you have it. There is all the information you need to start your journey into the world of weed stocks. Just remember: research is key. Also, stocks aren’t like placing a bet on a football match. Unless that football match lasted months or even years. It’s a slow game. So you have to be in it for the long haul. Very rarely does anything change massively over night. Although saying that, it could. Keep your eyes peeled and your patience high. Best of luck.
If you want to check out the sort of products that make up some of these companies; like CBD gummies and dry herb vapes then take a look at our range.
As always we hope you found this article enjoyable and, most importantly, educational.
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