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Posted on 03 November 2013.
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With the legalization of marijuana in the states of Washington and Colorado on January 1, 2013, publicly traded marijuana stocks have suddenly caught the attention of Wall Street. Many marijuana stocks rallied higher in early 2013 on the news of legalization in two states, as investors saw a new high growth sector materializing. Other news during 2013, such as an August 2013 decision by the United States Department of Justice not to challenge state marijuana legalization and medical marijuana laws, also provided a boost to marijuana stocks. The good news for stock market traders and investors that like to focus on the next hot stock market sector is the marijuana industry and marijuana stocks are still in their infancy in the United States, and will likely remain one of the hottest stock sectors for years to come, as growth in the marijuana industry accelerates.
There are numerous publicly traded stocks in the United States that generate a portion or all of their revenue from some aspect of the marijuana industry. Most of the stocks are penny stocks, which means they have great potential to appreciate in price as the marijuana industry experiences rapid growth in coming years. There is reason to believe that the rapid growth in the marijuana industry will continue for many years to come. Additional states, including Maine and Oregon, have strong marijuana legalization efforts underway, while many other states have either legalized marijuana for medical uses or are entertaining proposals to do so. This will likely continue the momentum that has already propelled marijuana stocks higher, as more markets are opened for companies in the marijuana industry to sell their products and services, and they experience an increase in revenues.
The following is a partial list of publicly traded marijuana stocks. As you can see, many of these stocks are penny stocks that trade on the Over The Counter Bulletin Board (OTC BB) or OTCMarkets.com (OTC Pink). This is as expected for such a young and budding industry as the marijuana industry. Some of these companies will be big winners and some will go out of business or be absorbed by bigger rivals. Only time will tell which companies in the young and growing marijuana business segment will outperform. The key to being successful with trading and investing in publicly traded marijuana stocks is to perform proper due diligence before buying a marijuana stock for a trade or an investment.
While publicly traded marijuana stocks will experience ups and downs with the overall stock market as changes in laws and court decisions affect the burgeoning industry, the general trajectory for marijuana stocks should be higher in coming years. The factors that will cause marijuana stocks to likely trade higher as time goes on include the new states and jurisdictions that legalize marijuana for either medical or recreational use and the greater acceptance of marijuana and its derivatives as legitimate medicinal treatments.
Another factor that may help propel marijuana stocks higher in coming years is the reemergence of hemp as an industrial fiber. Hemp is a cousin of marijuana that lacks the psychoactive chemicals that marijuana has. Hemp has been used around the world for industrial purposes, from making rope to making clothing, for centuries. In the United States, production of hemp was banned at the same time as marijuana came under prohibition, due to the inability of law enforcement to be able to distinguish between the identical looking plants. With marijuana becoming legal in more places in the United States, hemp is also likely to become legal to grown again in the United States. When hemp becomes a commonly produced industrial crop, it will benefit companies that provide equipment, supplies, and services to both the marijuana and hemp industries.
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