“Shorting is a problem,” he adds, referring to a process by which investors dump borrowed stock that they think is going to decline, then buy it back at a reduced price.
GW Pharmaceuticals, a UK-based medical research firm, is one of the few cannabis-related firms listed on a major stock exchange sites such as the Cannabis Financial Network (CFN), which offers in-depth analysis of marijuana firms, are in high demand. The consultancy says it identifies “legitimate companies that are well positioned” to do well in the new markets, and favors firms with a publicly demonstrated business model, who make most of their money through sales of medicinal marijuana.
Experts such as Alan Brochstein, a financial adviser who was an early adopter of marijuana portfolios, are also sought after by those looking for a foray into the foliage.
“I spent six months being negative — I saw a lot of shady business practices,” says Mr Brochstein. “But there are newer and better companies now.”
There are better investors too — most of Mr Brochstein’s clients are “people who appreciate the long-term growth story, and don’t partake in the herb,” he insists.
Marijuana in the US: Twenty states and Washington DC allow some medicinal use of marijuana Colorado and Washington are the first US states to allow the legal purchase of marijuana for recreational use. Some 44% of Americans over 26 used marijuana in 2012, according to the National Institute on Drug Abuse.
Ultimately, Mr Brochstein, and his fellow weed stock enthusiasts, are betting on the marijuana market maturing soon, and they may well be vindicated. Medicinal marijuana is now legal in 20 states and the District of Columbia, with more states set to consider decriminalizing the drug altogether.
To read more, visit http://m.bbc.co.uk/news/business-26682207