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Investing in Marijuana Stocks

Medical Marijuana Gains Ground

Written by Erik Neilson
Posted February 20, 2013 at 7:07PM

Anyone who paid attention to the last election knows that medical marijuana is fast becoming one of the hottest topics in America today. With states such as Colorado and Washington at the forefront of the legalization movement, it’s not much of a stretch to predict that big changes will continue to occur in America in the coming years. No matter where one stands on the issue, it’s time to start thinking about the future of medical marijuana and what it could mean for the stock market.

Take Medical Marijuana Inc. (PINK: MJNA), for example. The San Diego, CA-based corporation serves as an umbrella for a handful of companies such as PhytoSphere, WellnessManaged Services and CanChew Bio-Technologies, each of which works to further and create awareness of the medical marijuana industry.

Already trading publically, Medical Marijuana Inc. is clearly focusing on increasing its number of shareholders, as evident by the thoroughly laid-out “Investor Relations” menu on its website.

But are marijuana stocks really restricted to the medical variety?

In 2012, the state of Colorado passed a bill under the name of Amendment 64, sparking controversy throughout the country. The bill effectively legalized marijuana for recreational use on a state level, making Colorado the first state in the country to take such a stance on the drug.

Prior to the passing of Amendment 64, however, marijuana had been legal for medical use just as it is in close to 20 other states in America.

A similar law was quickly passed in Washington State, proving that legalizing marijuana for recreational purposes is very much on the radar for both politicians and citizens in other states around the country.

It may not be apparent at face value just how much these potential changes in legislation will impact the market, but the important thing to realize is that marijuana is shifting its role from an illegal drug to a regulated commodity.

Users in Colorado and Washington no longer have to take clandestine routes to find the drug on the street; they can now purchase it legally at “dispensaries” located throughout each state.

For those unfamiliar with the term, dispensaries are not dissimilar to small neighborhood markets except for the fact that they specialize in the sale of marijuana, both in plant and edible form. Patrons can also purchase seeds and special equipment in order to grow their own marijuana—something that would have been practically unheard of just a decade ago.

With dispensaries popping up all over the country (they can also be found in states where marijuana has been legalized for medicinal purposes), the industry seems to be gaining ground and breaking away from the territory of being a fad.

While the future of regulation remains to be seen, bills such as Amendment 64 in Colorado aim to regulate the drug in similar ways to how alcohol is regulated. According to the Yes on 64 campaign, the law serves to make personal use, possession, and growing of marijuana (in small quantities) legal to anyone over the age of 21 years old. 

It also establishes a system in which the drug is taxed in similar ways to alcohol, as well as allowing for the cultivation and sale of industrial hemp. Marijuana, then, becomes a true commodity that—while not yet legal on the federal level—is steadily gaining ground.

So what does this mean for potential shareholders? As legislation continues to spread across the country, corporations such as Medical Marijuana Inc. are likely to rise in numbers, meaning public trading of stocks related to the drug will inevitably increase.

Since the issues regarding legalization of marijuana for both medicinal and personal use are so popular at the moment, the presence of marijuana stocks is likely to increase much faster than most people think. Now may be the time, then, to start looking at the options from an investor’s standpoint.

Even if legalization of personal use takes a long time to spread, medical marijuana is already legalized in close to 20 states. This will invariably grow, thanks to the fact that thousands of patients across the country benefit from using the drug to fight complications of cancer treatment, HIV/AIDS, and other chronic illnesses.

Extensive research and development is being done to supply the drug in both raw and processed forms, with new advancements occurring regularly. 

The future of marijuana and its presence on the stock market may be unclear, but it’s safe to say that things look rather promising for potential shareholders.



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