With the ongoing madness of the 2020s, many Americans have been discouraged from investing, due to mounting losses in many market sectors.
It can be especially nerve-wracking to put more of your hard-earned paycheck into an account that has seen a lot of volatility over the past couple of years.
However, investors with a long-term view could see this market uncertainty as an opportunity to buy high-potential stocks at a significant discount.
So, aside from high-flying tech companies like Amazon, Apple and Telsa, what other growth options are there?
An interesting option for investors is the cannabis industry.
Although this year sees a significant drop in share price due to tax and legislative pressures, the US cannabis industry is expected to see legal sales in excess of $52 billion in 2026 alone.
The industry as a whole is poised for growth, especially if federal legalization moves forward under the current administration.
So if cannabis stocks are so great, why are their share prices falling?
The main reason for this downward trend lies in the uncertainty about the timing of federal legalizations in various accounts.
More importantly, when and how will the industry be legitimized by the federal government, and in the short term, when will banks be allowed to offer credit to the state’s current legal operations?
It is widely hoped that removing these obstacles or both could help cannabis stocks reach new heights.
According to Viridian Capital Advisors and others, the first opportunity for legislative change could come in late 2022 after the midterm elections.
In addition, they claim that one of the biggest challenges for the sector is its inaccessibility for investors.
Many US cannabis stocks must trade as OTC or over-the-counter stocks, which means they can be more difficult to invest in and also a riskier investment than NASDAQ-listed stocks.
This is one of the main reasons why American investors were quick to turn to Canadian companies like Tilray, which were available to almost every mainstream investor.
With all these risks assumed, why are investors flocking to the cannabis industry?
On the one hand, almost all experts agree that legalization is a certainty in the future.
More than 50% of Americans believe that cannabis use should be legalized, and its use is already legal in some form in 35 states.
Every year more states are expected to include recreational marijuana use in their registries, and eventually the federal government is expected to follow suit.
Once the cannabis industry is legalized and able to access investment and institutional capital, experts expect widespread opportunities and growth both domestically and internationally.
For investors looking to take advantage of these phenomenal long-term prospects, 2022 may be the perfect year to invest.
With general bearish trends and market uncertainty, almost all sectors have fallen well below their 2021 valuations.
This widespread market pressure could allow investors to enter the cannabis industry at a significant discount, especially if the industry moves forward legislatively in late 2022.
How to invest in cannabis stocks
If you decide that investing in the cannabis industry is the right choice for you, what are the best and safest ways to do it?
For the most part, buying individual US cannabis stocks can be complicated depending on your broker.
For investors who manage their own investment, be sure to check with your broker what options are available in the OTC market.
For other investors who prefer to invest in ETFs and/or through a traditional broker, there are a growing number of index funds and ETFs that broadly cover and track the cannabis industry and can offer a way to invest without giving up to the security of diversification.
Additionally, international cannabis stocks such as Tilray are listed on common stock exchanges such as the NASDAQ and are widely available to investors on almost all platforms.
Such actions could provide a safe and proven entry into the industry, without having to worry about the short-term risks surrounding US legalization.
Overall, the cannabis industry has been an interesting sector to watch over the past few years and is expected to continue to see near-term volatility as the road to legalization continues.
For long-term investors looking to expand their portfolios at a potential discount, the marijuana business could offer a significant upside.
In addition, with greater accessibility to institutional capital, the cannabis sector could rise to new heights with the rush to acquire competitors and expand with a large increase in funding.
Whether or not you decide to invest in the marijuana industry is up to you, but either way the industry is expected to continue making headlines on its long and tumultuous road to state and federal legalization in the United States.