Cannabis Stocks

The cannabis industry is thriving right now, with several states having already legalized marijuana and several more states set to vote on marijuana legalization ballot measures in the future. The boom in cannabis sales and the optimistic outlook for future efforts to legalize both recreational and medical marijuana across the U.S. has prompted many individuals to consider investing in marijuana stocks. So, how risky are cannabis stocks? Are there other, more stable ways to invest in cannabis?

Pot Stocks Pose Significant Risks and Can Plummet in Value

The potential for growth with cannabis investments has probably never been higher. In 2018, Grand View Research put a valuation for the legal cannabis market at around $10 billion. Now, the projections indicate that the cannabis market could exceed $70 billion by 2027. Needless to say, these figures have many investors excited about the opportunity to get in on the ground floor and take advantage of expected strong returns. Moreover, given that numerous states have already legalized either recreational or medical-use marijuana, the marijuana market is likely to present investors with ample opportunity to make money in the years ahead.

One way for an individual to invest in marijuana is through cannabis stocks. But pot stocks might not be the right choice for savvy investors who are interested in a solid, stable, long-term investment. Some of the downsides to cannabis stocks include:

  • Too Many Pot Stocks: In today’s market, there are a lot of different publicly traded marijuana companies for investors to choose from. Unfortunately, it is unclear which, if any, of these companies will be “the one” to conquer the cannabis industry. This can make choosing a marijuana stock extremely difficult.
  • Limited Returns: While some cannabis stocks may be capable of seeing short-term double-digit price increases, it is also not uncommon for just one day of bad results to trigger several months of steady declines as short sellers hone in on the stock and drive the price lower and lower. Ultimately, the ROI on a marijuana stock can be limited.
  • Marijuana Stocks Can Crash Completely: Compounding the problem of limited short-term returns on cannabis stocks is the fact that some cannabis companies can plummet in value without any advance warning. In just the past year, several pot companies faced cash flow issues and subsequently posted lower-than-expected quarterly results, leading to massive single-day stock declines that wiped out investors.

Investing in Cannabis Real Estate as an Alternative to Cannabis Stocks

The cannabis market offers practically unlimited growth potential, but the reality is that cannabis stocks are often too unpredictable for risk-averse investors. If you are looking for a steady return on your investment, tying your future economic security to pot stocks could lead to a lot of sleepless nights. The good news is that there are other cannabis investing options, such as cannabis real estate. While investing in marijuana stocks might seem easier because it can be done with the click of a button on your computer, the more personalized nature of investing in cannabis real estate makes it a reliable and relatively secure investment.

Scythian Real Estate is a privately held real estate fund and has partnered with some of the country’s largest cannabis cultivation, manufacturing, and retail companies. Scythian’s portfolio includes marijuana retail properties in Colorado and North Dakota, and the company is currently expanding to other limited license states throughout the U.S.

Contact Scythian Cannabis Real Estate Today

Scythian Real Estate has an acquisition pipeline of cannabis real estate assets valued at nearly $40 million. For more information, email Scythian.

PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.