Investing in Marijuana: How the Once-Vilified Plant is Changing the Stock Game

by Andrew McGuinness     Jul 16, 2019

If you've been following the stock market for more than a few decades, you might remember that research into the medicinal properties of marijuana was projected to change the future of not only the stock market, but the entirety of the world. Nearly every major university had a program instituted to study the effects that the drug had on both the mind and the body, and research programs were fighting to take out the loans that they needed to ensure that they would be the ones to make the next major breakthrough for the world. However, as the government of the United States began to crack down on illicit drug use and instituted the War on Drugs during the Bush administration, many of these studies found themselves going against the law practically overnight. Countless research projects across the country were dropped, and those who continued faced severe penalties ranging from fines to jail time.

In recent years, marijuana has once again come under the spotlight of investors and researchers as more and more people push for the drug to be legalized in at least one form. These medical doctors, politicians, and even everyday advocacy groups have not just changed the culture surrounding the use of marijuana for personal and medical use- they've also made headway into changing the legal policies surrounding the controversial substance. For example, in California, it is now legal for those suffering from conditions like arthritis, anxiety, and some types of cancer to receive a medicinal card that allows them to easily and legally purchase marijuana from a type of pharmacy called a dispensary. In even more liberal states like Colorado, the drug has even been legalized for personal use. Many other parts of the country have elected to change the classification of possession charges, effectively downgrading punishment from jail time to small fines, as is the case in the city of Philadelphia. All these signs point to marijuana's country-wide legalization in the future- and companies and investors are taking notice and looking to get a slice of the pie.

Some companies aren't waiting for total legalization to get a jump-start on capitalizing on the marijuana market. Global healthcare company Bayer (mostly known for their household aspirin) has recently signed licensing agreements with a small biotech company based out of the United Kingdom to research the introduction of the active chemical compound that causes marijuana users to feel a euphoric high into a spray form- a move made to attempt to capitalize on the market that believes in the medical properties of the drug but who wish to avoid smoking it directly and damaging their lungs. In 2017, Bayer also purchased genetic modification company Monsanto for over 66 billion dollars; the company, famous for increasing crop output through genetic modification of plant DNA, is no doubt desired by Bayer for their potential to introduce GMOs to the marijuana industry.

So how can you, a small investor, take advantage of the steadily increasing marijuana market? Experts say that the best route is to stick with pharmaceutical companies that are already profitable; it's likely that the majority of the United States will legalize marijuana for medicinal usage before it makes the jump to a recreational substance, meaning that your stocks will increase in value faster. Established pharmaceutical companies that are already profitable also present less of a risk to investors than new names in the game. By investing in solid, profitable medical companies, you'll be ready to take full advantage of the marijuana market when it takes off- and the future looks bright.

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