The legal marijuana industry is experiencing unprecedented, somewhat euphoric, growth. Thanks to widespread legalization of recreational marijuana in the United States, legal marijuana sales jumped by over 36% to roughly $30 billion dollars in 2017. Early investments in marijuana stocks have resulted in enormous gains. Here’s the inside scoop on how you can get in on the action.
Quick Summary
- You need an online low-cost broker to buy marijuana stocks that permits OTC stock trading
- A lot of popular marijuana stocks trade on the OTC exchange
- TradeStation is the best broker to buy marijuana stocks in 2018
- TradeStation doesn’t charge any inactivity or maintenance fees
- Consider buying a marijuana ETF to invest in a wide range of other marijuana companies
- MJ (a marijuana ETF) and MJNA (a popular marijuana stock) are two great investments to start
Why Buy Marijuana Stocks?
Over 400 independent marijuana retail stores opened for business on California’s first day of effective recreational legalization of marijuana on January 1, 2018. Suffice to say, the marijuana industry is absolutely booming. Investing in marijuana stocks right now is like investing in alcohol companies after prohibition ended in the early 1930s.
Step #1: Opening an Account
The first thing you’ll have to do before you can invest in marijuana and cannabis companies is open an online brokerage account.
Not only will this allow you to invest in the sticky green, but you will also be able to make other investments, like buying shares of stocks like Apple, Snapchat, and Facebook, which is a win-win.
Investing is how the rich keep getting richer. TradeStation is the top broker for investing in marijuana stocks in 2018, (see full TradeStation review in new tab).
- $5 flat per trade, among lowest fee in the industry
- Ability to trade all OTC marijuana and cannabis stocks
- No inactivity, maintenance, or hidden fees
- 24/7 knowledgeable customer service
- Top-rate mobile trading app and downloadable desktop platform
Step #2: Making the Trades
Once your account is opened (takes 5 mins), the next step is to navigate to the “Trade” tab on TradeStation’s online trading platform.
For this example, we’re going to use MJ, which is a popular marijuana ETF that invests in a dozen small start-up marijuana companies. ETFs are wise investments because they provide diversification. When you invest in an ETF, you can invest in multiple companies at once. Sometimes this is better than investing in one particular stock.
Type in the ticker symbol, “MJ” into the the “QUOTE” box. Once you hit “enter” or click the blue arrow, you’ll see real-time prices and see buttons to buy and sell.
We always prefer to use limit orders, because you get to decide what price you want to buy or sell at. A market order will execute your order at the current market price. This is sort of like buying a house without looking at the offering price; for stocks, market orders are only useful if you don’t care about the short-term price movements and just want to buy the stock. After submitting your order, you’ll receive a confirmation of your purchase and you’ll be a legal marijuana investor!
If you want to sell your investment and close out your position, all you have to do is click on your position in your TradeStation account and click “sell”. Of course, if you need help with anything in this process, customer service is ready to help you 24/7.
List of 10 Popular Marijuana Stocks to Invest In
MJNA is one of the most popular marijuana stocks to buy, but here are some other startup marijuana stocks that you should take a look at.
(IMPORTANT: We do NOT receive any compensation from the companies on this list. These are just popular marijuana stocks to invest in.)
| Company | Stock Ticker | Med or Rec |
|---|---|---|
| GreenGro Technologies, Inc. | GNRH | Both |
| Cannabis Science, Inc. | CBIS | Med |
| American Cannabis Company, Inc. | AMMJ | Both |
| United Cannabis Corporation | CNAB | Med |
| CannaGrow Holdings, Inc | CGRW | Rec |
| Cannabics Pharmaceuticals Inc. | CNBX | Med |
| Rocky Mountain High Brands, Inc. | RMHB | Rec |
| PotNetwork Holding, Inc. | POTN | Both |
| Puration, Inc. | PURA | Rec |
| Medical Marijuana, Inc. | MJNA | Both |
Tips for Success
Buying individual stocks is great, especially in the marijuana sector, but often it can be wise to diversify and buy a basket of stocks. A really easy way to do this is with an ETF (exchange traded fund) called ETFMG Alternative Harvest ETF (ticker symbol “MJ”).
MJ is a global ETF. Canada and the United States resemble roughly 75% of the ETF’s holdings, while the remaining 25% of MJ’s holdings are overseas cannabis companies. Depending on your view of how/if more legalization of marijuana will take place over the coming years, a global ETF can certainly be seen as a boon. As legal marijuana sales increase, so will public interest and public investment, so investing in a global marijuana company makes sense.
Although it’s impossible to tell which way an investment will move, given that marijuana just became legal in California and Nevada in 2018, it doesn’t seem unreasonable to think the entire industry is just getting started. MJ provides exposure to over a dozen marijuana companies, and is an excellent place to start.
What You’ll Need to Open a Brokerage Account
Opening an Account
It takes about 5 minutes to open an account with TradeStation. There is no fee to open or maintain.
Verifying Yourself
You’ll probably have to answer questions about your current income and employment status.
What You’ll Need
US licensed stock brokers are required to have each client’s Social Security Number for tax purposes.
Final Thoughts on Investing in Marijuana
Before you buy marijuana stocks and start investing in the marijuana industry, you should know that investing is always considered somewhat risky.
As with any investment, there is the possibility that the value could go down. However, because there is heightened risk with buying small marijuana stocks, there is more reward. Massive companies like Apple and Google physically have less room to grow (their stock prices are already so expensive), because they are already so well-known and owned by so many investors.
Since marijuana literally became recreationally legal this year for one of the most populated states in the US (California), recreational and medical marijuana companies are perfectly positioned for massive growth.
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Updated: September 21, 2018