The headline may seem to promote pessimism for the future of marijuana stocks, but really it is focusing on the opportunity that stands before day traders that are interested in the cannabis sector.
Day traders thrive on volatility, looking for the spikes and dips in everyday prices, that, timed precisely, can provide a pathway to profits.
California just legalized recreational marijuana in 2018. Following in the footsteps of Colorado, Washington and other states, the Golden State is looking to cash in on tax revenues in the billions.
But it has been a bit of a rocky start. As with the opening of any new market, California moving into the cannabis business has shown is share of speed bumps, from the battle for consumers between unlicensed and licensed businesses to a lack of viable financing to the temporary lowering of cannabis taxes in order to spur legal producers.
But this chaos can provide an opportunity for the right thinking sort of investor. With companies making inroads into the state, you are going to see prices spike and fall based on the intricacies of local California law and where the gaps are. With local municipalities and the states fighting over how these businesses can be regulated, there are sure to be places where public companies are going to see their share prices make moves.
And that is all exacerbated by the lack of real financing for marijuana businesses. There is a proposal running through the California legislature for a state-chartered bank that would provide loans for legit cannabist businesses. That is a real need because many local banks will shy away due to local regulatory concerns and national retail banks are wary of these businesses because of the uncertainty of how the Justice Department will go after marijuana money men.
Testing is a problem as well. Many sellers will be in for a surprise in July because new testing protocols will move into place and the product needs to live within those strictures. There is a huge opportunity for investors that see the growth potential for labs in California.
So that is the short term picture. The long term picture is still bullish. Cannabis acceptance is still on the upswing in public opinion. It might take a while, but most states in the country are going to follow suti and the market for legal cannabis products is going to grow and grow. Beyond the obvious recreational demand, the medical marijuana sector is even more mature and more likely to pay off for traders and investors quickly. There are proven medical use cases for cancer patients, sufferers of epilepsy, PTSD patients and many other dealing with chronic pain and disease. That is a given. And companies in the US and abroad are making strides in creating viable pharmaceutical products for those that don’t want to or cannot smoke a joint.
While many may see the confusion and the potential for problems, the savvy investors will be excited by the prospect of hard-working business owners coming in to solve the problems that the new markets dream up. That is the cycle of capitalism and that is where the profits can be made.
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