What You Need to Know About Investing in Marijuana

Marijuana News Aug 9, 2016

In 2015, Juan Manuel Santos passed a law that legalized the cultivation and sale of medical marijuana. The laws allow commercial cultivation, processing, and exporting of various medical marijuana products like cream and oil. The Latin American country now joins other Latin American countries, like Uruguay, who are optimistic about legalizing medical marijuana and how it will put a dent on mainstream drug trafficking businesses in their countries. For decades, Colombia has been historically known for some of the most notorious and dangerous global drug cartels. Colombia and Uruguay are finally trying to make a change.

The legalization of medical marijuana in Colombia has quickly gained a lot of global attention. Most recently it was highlighted in an article featured in the NYTimes, discussing how the medical marijuana industry can lift a whole economy through creating legal job opportunities for companies in the space. In the article, the Colombian Health Ministers state, “ We think that Colombia can build a successful international business around the exportation of medical marijuana.” He added, “The country is ready to participate in this emerging global market.”

Due to the ongoing battle between state and federal marijuana regulations in the U.S., the federal government currently bans the import of any marijuana products. Colombia seems to present a competitive advantage over companies that are operating in the U.S.

“Unlike the U.S., Colombia’s government is committed to see the medical marijuana industry and hemp industry grow, as the only unrestricted legal producer of both in the West, I believe Colombia is well positioned to become a leader. Our growth cycles and cost of production are ideal and can’t be economically replicated in North America,” states John Campo, CEO and President of New Colombia Resources, Inc. New Colombia currently holds a joint venture with Sannabis SAS, a Colombian company that produces and sells medical marijuana products.

“Our research and manufacturing centers will be ideal for companies in the U.S., Canada, and Europe to investigate both medical and industrial applications without the fear of the big bad wolf blowing the house down,” stated D.G. Tatum, CEO of Valley Medical Group of Colombia. “We are aiming for Global Market Share.”

With the presidential elections going on, along with the DEA coming to a decision on whether to re-schedule marijuana from Schedule-I to Schedule-II, the United States’ growth in the marijuana industry remains unknown. This could potentially present Colombia as an attractive opportunity for investors and companies in the industry. Just to put it in perspective, Marijuana pioneer, California, for example, brings in $1 Billion-plus annually in medical marijuana sales. On top of the financial opportunity, this emerging market could also aid in battling drug trafficking in Colombia, building up their economy through a multi-billion dollar global trade industry.

Here’s what you should know about this exciting growth market.

Marijuana momentum is building into the U.S. November elections and that might have you considering investing in marijuana stocks. The market for marijuana stocks could expand significantly in the coming years, but before buying, it may help to educate yourself a bit about the market’s potential and the risks that are associated with investing in marijuana stocks.

Why invest in marijuana stocks?
You may already have some reasons for wanting to invest in marijuana stocks, but as a refresher, here are some big reasons why investors are warming up to the marijuana market.

4 states have approved recreational marijuana laws.
24 states have approved medical marijuana laws.
Over 30 countries have lesser restrictions on Medical use of Marijuana

The legal marijuana market grew 17% in 2015 to $5.4 billion in th eU.S. alone, according to ArcView Market Research.
ArcView estimates the market will grow another 25% in 2016 to $6.7 billion.
After recreational marijuana laws passed in 2012, Colorado’s marijuana sales have already hit $1 billion per year.
And, research into marijuana based medicine suggests it could offer new hope to people suffering from devastating diseases, such as epilepsy.
The marijuana market is expanding quickly as states pass pro pot legislation. But sales of marijuana could really take off if voters give marijuana proposals an OK in heavily populated states like California. California was at the forefront of the medical marijuana movement in the mid 90s and as many as 1,000 medical marijuana dispensaries already operate there.

California’s dispensaries could get much busier if the Adult Use of Marijuana Act appears on California’s ballot in November. The Adult Use of Marijuana Act institutes a 15% excise tax on retail sales of marijuana and allows people to possess up to one ounce of marijuana and six marijuana plants. If voters agree, then businesses already operating medical marijuana dispensaries would get preference for recreational marijuana licenses, and revenue that’s generated from marijuana taxes and fees will be used to support the state’s social programs.

This proposal is similar to proposals that have passed in other states, like Colorado, but it’s anyone’s guess whether Californians will vote in favor of it later this year. However, a poll conducted by the Associated Press-NORC Center for Public Affairs Research earlier this year found that 61% of Americans support legalizing marijuana. That’s the highest level of support for legalization on record, so it wouldn’t be too surprising if pro pot laws pass in California, and elsewhere. If so, then sales of cannabis are likely to accelerate.

Currently,  marijuana stocks trade over-the-counter (OTC) or in private trades as does the stock of Valley Medical Group. Offshore companies are offering a much better return on investment than the OTC’s. OTC’s are akin to Wall Street’s Wild Wild West. Companies offering stock this way often do so because they can’t meet the stringent financial and reporting requirements of major stock exchanges, including the New York Stock Exchange and the NASDAQ Exchange. As a result, OTC markets are rife with unscrupulous stock promoters attempting to separate investors from their money.

Unfortunately, many investors have already felt the sting of these pump-and-dump marijuana stock promoters. After recreational marijuana laws passed in Colorado, promoters fueled stratospheric gains in marijuana stocks. However, Securities and Exchange Commission (SEC) investigations into securities fraud has resulted in most of these marijuana stocks losing almost all their value since then.

Remember, when considering stock in the marijuana emerging market, 
consider the source. Be very skeptical of unknown companies that are continuously tooting their own horn. They may be trying to paint a rosier picture of their prospects than they should be.
Do your research. Never invest without spending a considerable amount of time considering the pros and cons.
Avoid name changes. One company changed its name four times in ten years and another company went from selling coffee to marijuana overnight. These are both examples of red flags that may be signaling a bad marijuana investment.
Focus on quality!

Offshore companies are emerging in the market as safe and stable.

Valley Medical Group www.valleymedgroup.com