Investing in companies that deal in marijuana. 1. If I buy stock in a company that makes money from marijuana can I get in trouble being I live in Louisiana. Would I be seen as a drug dealer in the eyes of the law? 2. The risk seems high, higher than I am currently, but I don't see this going away. 3. I'm a stock market virgin other than my 401k, I'm not well versed, but isn't now the time to get in? I would really appreciate what @LSUsupaFan has to say. Thanks
Btw, I read where this company called medbox went from 23 bucks a share to 93 bucks a share in like 5 cycles whatever that means. That's sounds awesome right?
There is nothing illegal in investing in pot stock. However, these companies are not listed and are traded over the counter and are very risky. The industry shows no profit yet and financial reports are suspicious. These stocks are highly subject to manipulation and are pumped and dumped. I have doubled investments in them but you have to play the game. I would not go long on anything. The past two election cycles the stocks rise on legalization enthusiasm. Then they are dumped by the guys who wait for the enthusiasm.
Take this stock for example: The end of 2012 was the presidential election and states had legalization on the ballot. After the election stocks jumped and the pumpers sold. At the end of 2013, there was the farm bill news and states like Kentucky wanted to legalize hemp growing. Enthusiasm grew and the pumpers dumped. The stock holders are there to take your money. They are pumping, dumping, and shorting. If you know that, then you can play the game.
The best way to end up with a million dollars in weed stocks is to start with two million. The stocks are extremely volatile, and are all on OTC exchanges. Money can be made in them. I put $100 in MJNA and $100 in HEMP and sold out at about $400. The positions I held would be worth about $100 today. Weed companies will be huge in the future, but don't invest in the ones that are around now. It is unlikely they will be around long. You can speculate and day trade with them, but buy and hold... no way.
So does it make sense to look at any Oregon start ups as a buy and sell considering recreational legalization is going on the ballot in November?
That would be the safest investment strategy for this sector. There is not any profit in the industry right now. The stock moves on emotions, not substance. Research the hell out of the company and make sure it is real and not a shell. That is often hard to do because there is not much info out there and most of it will come from the company itself which makes it dubious. Buy on its low point (many are there now through November), pick your target (don't be greedy), and sell when you get there. Don't be fooled by an article or stocks message board touting long term value. The floor will be pulled out from under you and the stock will be shorted all the way back to where it started. OTC trading is an ugly business.
A better way to get a decent return on your investment might be to buy an old warehouse in Oregon. In Colorado real estate brokers found that old unused warehouses that had been for sale for several years were selling like hotcakes at premium prices after weed was legalized. Growers were buying the warehouses so they could grow year round in a controlled environment. If you can't afford to buy a warehouse maybe there is a real estate company specializing in that field that is traded publicly. If you find that real estate speculators in Oregon have already caught on to this strategy and have driven the prices up then find a state where marijuana is likely to be legalized but isn't eminent. Buy a warehouse dirt cheap and in two or three or four years when legalization finally is enacted you make a killing. If you just want to invest in pot because you are a fan do what a friend of mine did. When the Boston Celtics went public he bought one share of Celtics stock and had it framed.
