I recently heard about a surge in the value of marijuana related stocks. Personally, I’m a little worried about these types of stocks. Apparently since Colorado and Washington have legalized marijuana on the state level, investors are betting on a bright future for marijuana and marijuana-related products and services.
This surely includes legalization in other states and quite possibly the federal level. I think this is a very optimistic view. First of all, from a legal perspective, marijuana is still classified as a Schedule I drug. It’s still illegal on the federal level and anyone in these states can be federally prosecuted. While the Obama administration has shown little interest in targeting these businesses that does not mean another administration would not. I don’t foresee federal law changing in the next few years on the issue, either. That leaves investors in a peculiar situation where a profitable cannabis company and good looking investment could be decimated overnight by some federal drug raid.
Additionally, there seems to be a significant potential for fraud with these stocks. FINRA has issued an investor alert pertaining to marijuana stocks. I suggest anyone considering about investing into one of these stocks read that bag. The FINRA alert lists some good, overall advice for avoiding scams. You may also be shocked learning about the crimes committed by past and present CEOs of this industry.
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Stephanie Ovadia is a practicing attorney, radio personality and mother of eight children. Stephanie's areas of practice include entertainment law and personal injury. She received her B.A. in political science from SUNY Binghamton and her J.D. from Southwestern University School of Law.