What You Should Know About Investing in Medical Marijuana

420 marijuana stock

Experts report that 2018 was a banner year for the marijuana industry. More states passed laws for medical marijuana programs, reaching a total of 33, along with the District of Columbia, Guam, and Puerto Rico. Other milestones include California joining Colorado to allow recreational weed and the approval of the first marijuana-based drug, which treats a form of childhood epilepsy. All of this culminated into a multi-billion dollar industry with a booming job market and a projected worth of $146.4 billion by 2025.

Investors everywhere, big and small, are wondering if the medical marijuana industry is a good place to put their money. While the future looks bright and Americans are embracing marijuana use more than ever, you want to make sure you know the facts before making your money decisions. Here’s a look at the pros and cons of marijuana investments.

A Look at the Pros

Let’s start with the positives. If you don’t know the history of legalization and why this drug is gaining popularity so quickly, here are a few details you should know.

Medical Need for Marijuana

The importance of medical marijuana in America can be illustrated by stories like Charlotte Figi — the little girl who spurred the change in cannabis laws because of severe epileptic seizures — or patients at the end of life who can enjoy their last days pain-free. According to procon.org, more than 3.5 million people in the U.S. hold current medical marijuana identification cards, and this number is only expected to grow. As more people are given the opportunity to see if medical marijuana can help their debilitating conditions, more stories of symptom-free lives might be shared. 

To get a real grasp of the impact these programs can and will have on millions of people across the nation, you need to understand how medical marijuana works and what it helps. Your body produces marijuana-like chemicals that alleviate inflammation and pain. So, when you smoke, vape, or eat marijuana products, it further stimulates the natural chemicals in your body to work better, alleviating long-term and painful symptoms.

Pain is the number one reason people ask for marijuana prescriptions, but you might be surprised to find out that it’s not the only common condition alleviated by medical marijuana. Many people struggle with gastroesophageal reflux disease, commonly called GERD or heartburn. This painful burning of the lining of your esophagus can be minimized by cannabis because it slows the secretions of gastric acids, making it an effective remedy.

Other common uses of medical marijuana include:

  • Nausea caused by chemotherapy treatment regimens
  • Seizure disorders
  • Cancer
  • Eating disorders like anorexia
  • Stress, Anxiety and Sleep
  • Crohn’s disease
  • Multiple sclerosis
  • Muscle spasms
  • Weight loss and poor appetite caused by chronic conditions such as AIDS

If you were to add up the numbers of people in America with each of these conditions, the reach of medical marijuana could be astronomical. As an investor, this is the exact kind of industry you want to find for your hard earned money.

It Might Be a Solution to the Opioid Epidemic

The opioid epidemic began in the late 1990s when the pharmaceutical industry assured providers that the risk of addiction to opioids was minimal. Physicians prescribed the drugs at high rates which led to widespread misuse. Once the long-term effects were well-identified, the epidemic was upon our nation. 

In 2017, more than 130 people died each day from opioid-related overdoses, and more than 11.4 million people misused prescription forms of opioids. Once a person is hooked, treating opioid addiction is challenging and places a significant financial strain on the healthcare industry. The number of deaths along with the social impact the epidemic is having has caused the medical community and policymakers to look for new ways to treat chronic pain.

Medical marijuana is hailed as one solution to the opioid epidemic. Some experts believe that the long-term effects of marijuana are minimal and the risks of addiction are nearly non-existent. However, the National Institute on Drug Abuse reports that 30 percent of marijuana users may develop some degree of marijuana use disorder. Because some marijuana products only contain the non-psychoactive chemical, some users might be able to get the benefits without the psychoactive effects. While the research is limited, medical marijuana could be one solution to the addiction issues in America.

A Look at the Cons

Every good investor must take a hard look at the good and bad, right? While individuals in the U.S. appear to be more accepting of marijuana use, the government isn’t exactly on board, and because of that, banks have their hands tied. Here are two possible cons you need to consider before investing in the adult use marijuana initiative.

Laws Pose a Catch-22

Before you place your money into medical marijuana, it’s essential that you understand the dichotomy that exists in our laws. The Federal government continues to consider marijuana a Schedule I drug. The U.S. Drug Enforcement Agency rejected an attempt to reschedule or de-schedule the drug in 2016 but cited lack of clinical benefits and safety data as reasons for keeping it as a schedule 1 drug. The process of looking at the scheduling of marijuana again could be years away. Because of the current classification, beginning the process of formalized testing on the drug is nearly impossible as researchers are met with large amounts of red tape.

Making the drug a schedule 2 drug might even make things more complicated. The schedule 2 classification would recognize the medical benefits of marijuana, which would give the Food and Drug Administration the power to tightly regulate any marijuana products, which would allow the FDA to be involved in functions such as packaging, marketing, and even manufacturing.

Little Access to Banking

Cannabis businesses have limited access to financial institutions because the federal government considers marijuana to be a schedule 1 substance. Bank officials continue to urge Congress to allow legal marijuana businesses access to banking, but no changes have been made at this time. Any banking institution that provides an account or loan to one of these businesses could be looking at criminal charges such as money laundering. All of these laws force legitimate companies into dealing solely in cash, making this industry a bit of a security concern for investors.

Making a Decision

Deciding where to put your money can be downright stressful. Do you choose a high-risk but possibly high-return stock or should you play it safe and go with one you should at least make a little money from? The choice is up to you. Make sure you’re investing in marijuana stocks because you believe in the mission of the company, not only for growth. Take a look at these 5 marijuana stocks before you make your final decision.

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