CBD products have steadily increased in popularity in the last few years. If the substance is legal in your country, there is a good chance that the CBD market is on a rapid rise.
In most cases, this has to do with changes to legislation and regulation. Many more countries are receptive to the idea of medical marijuana, which is why they’re doing their best to simplify and streamline their domestic market. Of course, the same goes for the US.
Nowadays, when you mention cannabis, most people think of CBD. We’ve managed to eliminate the majority of stereotypes and prejudice that was connected to recreational marijuana.
Furthermore, people no longer see this drug as a volatile, gateway drug as it was perceived several decades ago. This makes the distribution and sales of cannabis that much easier.
Based on all of these signs, you might think that investing in CBD is a good idea. You wouldn’t be wrong.
There are lots of reasons why investors should be intrigued by this substance, and in this article, we will consider some of the main pros and cons regarding medical cannabis.
Let’s see how to invest in CBD the right way!
How to invest in CBD: Investment basics
Before you invest in any CBD-related business, we suggest that you start with thorough research. This is especially important when it comes to CBD stock market investments and choosing the right broker.
You want a person that has some experience with the industry and price fluctuations. Keep in mind that the cannabis market is relatively new, and there are still a lot of issues surrounding it. So, it is best to find someone who knows his ways around the ropes.
At this moment in time, CBD oil is regarded as a safe investment. The market as a whole is constantly trending upwards, but that doesn’t mean you can’t make a mistake.
The lack of regulation can especially be problematic as there are a lot of companies with shady policies. Now, while most cannabis companies listed on a stock exchange are regarded as safe (and are constantly audited), there is a margin of error.
Of course, you also have other investment options.
For example, you can invest directly in a company. Angel investors are becoming more common within the industry, and as everything becomes simpler, it will make more sense to invest.
Of course, you don’t have to go with major companies; you can also invest in small, local CBD dispensaries.
The main reasons to invest in CBD
Although the current trend is promising, you need to scratch the surface.
What is your end goal? How do you see the CBD industry in 5 to 10 years? Will it continue trending on the same path, or will it drop?
Here are some facts and figures that will persuade you to invest in the CBD business!
CBD oil is legal in almost every American state
CBD companies had a major breakthrough in 2018 when Donald Trump enacted a new Farm Bill. According to it, you are able to manufacture, distribute, and sell medical cannabis.
Keep in mind there are some differences between federal law and state laws. Recreational marijuana is especially problematic as it is still illegal in many states.
However, if you decide to invest in CBD, you probably won’t encounter any major issues. The gradual legalization of substances makes it easier for CBD producers.
We’re slowly creating a unified market that would allow small, successful companies to make extreme profits once cannabis is legal in all states. So, if you make a smart initial investment, you can make several-fold returns.
The sales are on a constant increase
As already mentioned, people are becoming more accustomed to the idea of medical cannabis. Although there was a lot of skepticism initially, there are now many more people who have seen the benefits of CBD firsthand.
The constantly increasing demand is one of the best signs of a good investment. Simply put, if there is a demand fluctuation or if a product is losing popularity, it can present a red flag for investors.
Luckily, this isn’t the case with CBD. Just so you know what we’re talking about, the US CBD sales were around $108 million in 2014.
Keep in mind that CBD wasn’t legal in many states. By 2018, the sales numbers rose to $358 million. According to projections, these numbers will increase even more in the next few years.
By 2025, CBD can become a billion-dollar business. What makes it even better is the fact is that CBD isn’t a seasonal product. It isn’t a short-term fab. Instead, it looks like a product that’s here to stay.
People are prepared to pay extra for quality
Another good investment sign is that people are prepared to pay extra for quality. In other words, CBD companies can make extra profits.
The need for quality medical marijuana is understandable: these products should help with various medical issues, so people are prepared to pay any price to get the best substance.
People are also more knowledgeable regarding various types of cannabis products. Big CBD brands are starting to emerge, and we are already noticing market segmentation.
Anyway, as people learn more about the substance, they will be able to choose the best product for their medical condition. It also means there will be a bigger need for product diversification (which is another way to make money).
When it comes to product quality, we need to mention a potential issue that is looming over the CBD industry. Given that the market is not fully regulated, some companies are providing bad products.
These CBD products have various unnecessary ingredients with low CBD content. Sometimes, companies utilize dubious extraction methods.
This can be a potential risk for the product’s popularity and credibility. However, as the government enforces better regulation, these companies will likely perish.
CBD is breaking generational barriers
There is an interesting titbit regarding medical cannabis. It is a substance that is widely accepted by both older and younger generations.
There are a lot of reasons for this. First and foremost, everybody’s into natural medicine. The consumers are sick of chemical substances and drugs that are full of dubious components.
It is much simpler with CBD as it focuses on one plant, and one substance extracted from that play. Given that this is marijuana, it makes sense that youngsters would be excited about it.
In the end, any form of cannabis was illegal until recently. The elderly are into it for other reasons – it provides relief for medical conditions that were previously incurable.
According to a study, cannabis is used by 10% of people who are older than 55. These are some staggering numbers given how new and untested the product is.
It also shows there is a lot of goodwill towards the substance, which makes us think that cannabis sales will continue growing in the future.
Other industries are trying to benefit from the CBD trend
It is a major, positive sign when traditional, conservative industries start working with products that were previously seen as volatile. This is the case with banks and CBD.
Until recently, it was really hard for cannabis companies to get a load. But this has changed. Lenders perceive cannabis as a great industry, and there are solid numbers to back it up.
But, the financial institutions are not the only ones to give cannabis a god. The traditional pharmacies and department stores are slowly starting to include CBD in their product assortment.
Perhaps the biggest positive sign is that the cosmetic industry is slowly starting to use cannabis for its items. This goes to show how good the plant can be for the skin and other organs.
Needless to say, this instills confidence in everyone who’s interested in working or cooperating with the cannabis industry and companies.
We are still learning about cannabis
One of the main criticism of medical cannabis is that we still don’t know much about the substance.
Initially, people were really scared of using it. But, with every new study, we are learning more and more about its potential benefits.
Whether it’s some research or a real-life situation, cannabis usually delivers. Sometimes, the results are so surprising that they can quickly change the opinion of people who were previously heavily against it.
Although everything we’ve seen so far is positive, that doesn’t mean that the drug is tested. There is a lot more we need to learn about CBD, and in particular, its long-term effects.
Based on what we know right now, it seems that medical marijuana is one of the safest investments out there.
The return on investment is growing
Although this goes against common sense, the ROI on marijuana projects and investments is continuing to grow. There are several reasons for this.
First, the US cannabis market is becoming more unified, making it easier for companies to distribute their goods. The cannabis growing technology and practices are also improving; something that was previously unimaginable is now within our grasp.
Like any other product, cannabis has a ceiling when it comes to potential returns. In the end, the competition is becoming stiffer and stiffer, so we cannot expect ROI to continue increasing indefinitely.
However, if you invest right now, you will likely be able to make a lot of money in the near future.
If you were wondering, “Can I invest in CBD?”, the answer is resounding yes!
The industry has a lot to offer, and we are just starting to unfold its potential.
If you need a quick tip, or perhaps a cannabis marketing agency to help your business, make sure to give us a call!