Buying penny pot stocks (a.k.a. shares of startup marijuana companies) is easy, and it is a 100% legal way to invest in one of the fastest growing industries in the world. Because marijuana is now officially recreationally legal in California, Nevada, Colorado, and Washington, loads of investors are scrambling to capitalize on the sales growth from the newfound legislation, and rightfully so.
As of data gathered in 2017, legal marijuana sales jumped by over 36% to well over $30 billion dollars. Given that pot is legal in both California and Nevada, it almost goes without saying that sales aren’t expected to decrease anytime soon. Here’s the inside scoop on how you can invest in the legal marijuana industry and buy penny pot stocks.
Key Points
- You need an online low-cost broker to buy marijuana stocks that permits OTC stock trading
- TradeStation is the best broker to buy penny pot stocks in 2018
- Consider buying an ETF (a company that invests in a wide range of other companies to provide diversification) instead of one individual, volatile pot stock
- MJ (an ETF) and MJNA (a popular penny pot stock) are two great places to start
Why Buy Penny Pot 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. Many of the companies legally selling marijuana in California and other states in the US are very small, with total valuations less than $300 million (this is considered small by Wall Street’s standards, anyway).
How to Buy Penny Pot Stocks
If you’re looking to buy penny pot stocks right away, the fastest method is to open up an online brokerage account and fund it, and as soon as you do this, you will be able to invest.
TradeStation (open TradeStation review in new tab) is the best broker for marijuana stock investing because they have the lowest fees, the backing of one of the largest online banks, and great customer service.
Plus, TradeStation allows OTC stock trading. This is important because many popular online brokers, like Robinhood, for example, don’t permit any OTC stock trading at all. Because of the small valuations of less than $300 million, all start-up pot companies trade on the OTC exchange in the US, and not on the NYSE (New York Stock Exchange) or NASDAQ. As such, you need to open an account with an online broker that permits OTC stock trading.
Step 1
Step 2
Once your TradeStation account is opened (takes 5 mins) and funded, the next step is to navigate to the online trading tab on TradeStation trading platform. Type in the ticker symbol, “MJNA” 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 Pot Penny Stocks to Start
MJNA is one of the most popular penny pot stocks to buy, but here are some other startup marijuana stocks that you should take a look at.
(IMPORTANT: WE DON’T RECEIVE ANY COMPENSATION FROM ANY OF THESE COMPANIES TO BE ON THIS LIST. THESE ARE JUST POPULAR MARIJUANA PENNY STOCKS)
| Pot Company | Stock Ticker | Medical or recreational |
|---|---|---|
| GreenGro Technologies, Inc. | GNRH | Both |
| Cannabis Science, Inc. | CBIS | Medical |
| American Cannabis Company, Inc. | AMMJ | Both |
| United Cannabis Corporation | CNAB | Medical |
| CannaGrow Holdings, Inc | CGRW | Recreational |
| Cannabics Pharmaceuticals Inc. | CNBX | Medical |
| Rocky Mountain High Brands, Inc. | RMHB | Recreational |
| PotNetwork Holding, Inc. | POTN | Both |
| Puration, Inc. | PURA | Recreational |
| Medical Marijuana, Inc. | MJNA | Both |
Tips on Buying Penny Pot Stocks
Buying individual stocks is great, espically 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 MJX.
MJX is a global ETF. Canada and the United States resemble roughly 75% of the ETF’s holdings, while the remaining 25% of MJX’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.
Final Thoughts
Before you buy penny pot stocks and start investing in the marijuana industry, you should know that investing is risky.
As with any investment, there is always the possibility that when you buy marijuana stocks, the value could go down. However, because there is heightened risk with small marijuana stocks, there is more reward. Massive companies like Apple and Google physically have less room to grow, 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.
Simply put, investing in marijuana stocks right now is like investing in alcohol companies after prohibition ended in the early 1930s. The risk outweighs the reward.
Opening an Online Brokerage Account is Easy
Opening an Account
Clicking on the above button will take you directly to TradeStation’s secure website.
Verifying Yourself
You’ll probably have to answer questions about your income and employment status.
What You’ll Need
Every US licensed broker is required to have each client’s Social Security Number for tax purposes.
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Updated: September 15, 2018