Can legalized marijuana be a stock opportunity? Stocks of companies involved in the production or sale of marijuana have soared, especially since Colorado legalized its sale starting January 1 and long lines formed at stores selling it. Washington State also has legalized it…18 other states plus Washington, DC, have legalized it just for medical use…New York State plans to allow 20 hospitals to dispense medical marijuana…and several states are eyeing ballot initiatives this year to allow medical use.
Some speculators say that this could be a $10 billion industry by 2018. But the stocks are tremendously volatile and risky…shares still trade for pennies on lightly regulated markets…and the companies have meager sales and no profits.
Shares of mCig Inc. (MCIG), which makes a marijuana vaporizer, rose by more than 500% in the past year, to 30 cents…supplier Cannabis Science (CBIS) more than tripled in January, to 18 cents… and GreenGro Technologies (GRNH), which makes equipment to grow marijuana plants, jumped more than 850% in January, to 42 cents.
Regulators have warned of scams involving some marijuana stocks (not those mentioned in this article) and pointed out that the CEO of one firm spent nine years in prison for drug smuggling and the former head of another was indicted for a multimillion-dollar Ponzi scheme.
If pot ever does lose its underground stigma, it’s likely that cigarette and pharmaceutical giants will move in swiftly and dominate the market, leaving today’s tiny marijuana companies in the dust.