Avoid marijuana stock scams and ride the wave.
Cannabis stock is a highly popular alternative investment option for investors all over the world. We want you to be able to take full advantage of the successful investment but with caution. Legal and legitimate ways to invest in cannabis stock can be hard to find. When you find one, it can mean high returns and a healthy portfolio.
The worldwide use of cannabis, whether it be medical or recreational is increasing, which means there has been rising popularity in cannabis stock. Companies all over the world are seeing growth, especially in countries like Canada, where recreational use has just become legal in 2018.
Cannabis stock is becoming a very popular investment as the legalization spreads, especially in North America in Canada and various locations in the United States. Global spending reached $9.5 billion in 2017. This is predicted to rise to $32 billion by 2022 with an average annual growth of 27.5%.
There are both medical and recreational marijuana opportunities to invest in all over the world. Medical marijuana can be used to treat anxiety, depression, pain, and stress, using ingestible products such as foods and drinks, or inhalable dried flower or vaping products. There are also CBD products. Recreational use refers to using cannabis for the psychoactive attributes of THC, an active chemical in marijuana.
With cannabis stock on the rise, unfortunately, so are the amount of scams out there looking to take advantage of hopeful investors. We do not want to make you too scared to invest in this growing investment opportunity so we have decided it’s best to prepare you and give you the tools to avoid the scams all together.
How to Avoid a Scam
We want to make sure that you are making a wise choice. There are a handful of steps you can take to ensure you aren’t falling victim to a scam. All of these steps include doing your research in order to avoid getting burned.
- Read, read, read…
Before choosing a stock, you need to choose a business that has registered with the Exchange Commission. If not, a cannabis company that has filed with the OTC Market may also be sufficient.
Even if the company in question has filed with the SEC, it doesn’t mean it’s not a fraud just yet. Read the filings is an integral part of the research process. In these filings, investors can read information including updates about the company, insider buying and selling, shareholder voting, and more.
Don’t just rely on press releases provided by the company. If you do this, you will only be reading positive information provided by the potentially fraudulent company.
- Double check the facts.
When you find a stock that you may be interested in, check out the company’s website. The first warning sign you may see is an unprofessional website. If you encounter this, it may be a good idea to continue looking elsewhere.
When you find a proper site, you can do a few things to check the legitimacy of the company. The first fact to double check is the address of the company. A virtual office or UPS store address is usually a bad sign. You can also call the number to see if someone picks up. You don’t want your call to go immediately to voicemail.
After you have done your research on the company’s website, the next step would be looking at older historical press releases. You don’t want a company that has been shifting areas of interest.
- Who are the executives?
A lot of cannabis companies are new and don’t have a researchable history so it may be hard to judge the company from that research. Because of this, you can look up the people who are heading the company.
You should be able to find LinkedIn profiles or even articles with the previous activities of the leaders of the companies. Do you trust these people with your money?
If you want to take an extra leap, you can try to research the people who have financed the company as well.
- What else to look out for.
How is the stock being promoted? Many fraudulent stocks will pay for positive news or email blasts. As a rule of thumb, it is a good idea to avoid stocks that spam your inbox or fax machine. There are also companies that send unrequested solicitations through social media, asking investors to buy private stock. It should go without saying but it is highly advised to avoid this kind of transaction.
You also want to make sure that the company you are investing in is located in an area in which marijuana is legal. This is especially necessary when looking at companies that directly work with the product such as growers and retailers. Many smart investors choose to put their money into a company that provides technology or services to cannabis-based businesses.
Another tactic that fraudulent companies will use is to pressure potential investors to buy right now or request information about your personal finances. They will also promise “guaranteed” high returns.
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