How to Get Started with Pot Stocks

BY Joshua Belanger | February 25, 2021 

Over the last few months, pot stocks have been on fire. And many are just now waking up to the opportunity we’ve been discussing all week.

However, there are still some questions those new-to-trading have about getting in on cannabis investing.

Like, importantly: how do you get started in the first place?

With federal bans on the underlying product of this industry, this can be a relatively confusing environment to navigate.

The federal ban on marijuana has kept some companies from gaining access to major U.S. stock exchanges. Though, that isn’t universal.

Some of the larger cannabis giants in the industry like Canopy Growth Corp. (NYSE: CGC) and Aphria Inc. (NASDAQ: APHA) have been able to get listed on the NYSE or NASDAQ exchanges.

These companies are easily bought through any regular or discount broker. From Charles Schwab to Robinhood.

Others are split into two categories: those only traded in Canada and those trading over the counter.

Despite the close relationship between the U.S. and its neighbor to the north, not all brokers have access to its stock market.

Both the Canadian Stock Exchange as well as the Toronto Stock Exchange (and the Toronto Venture Exchange) are completely separate entities from the likes of the NYSE and NASDAQ.

Just as an example, Adastra Labs Holdings Ltd. (CSE: XTRX.CN) is a very small cannabis company that processes the raw plants into their different parts. But, as you can see, it only trades on the CSE.

That means most regular U.S. brokers can’t buy it. Fortunately, these kinds of only-Canada plays are rare.

Take Charlotte’s Web Holdings Inc. (TSX: CWEB.TO) (OTC: CWBHF) from yesterday’s article. Charlotte is Colorado-based. But since it has been around a while, even before the passing of the 2018 Farm Bill, it was forced to raise capital by going public in Canada.

You can see it is still traded on the TSX, which would be a bit difficult for U.S. investors to gain access to. However, it is also traded over the counter. Meaning it has shares that are accessible to Americans, even if they aren’t actually interacting with the TSX.

Most all main U.S. brokers allow customers to trade over-the-counter stocks like this one without much fuss.

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So, when starting out with buying your first pot stock, this should definitely be a consideration.

For the most part, a regular U.S. broker like TD Ameritrade or Robinhood will give you access to most pot plays on the market. For Canadian-only ones, you may run into a bit more trouble.

Of course, many other questions pop up when just starting out. Even if you already have your eyes set on a particular U.S.-traded pot stock, you may still have questions.

Quickly, I want to address some of these.

Getting Started with Pot Stocks FAQ

Q: Aren’t Pot Stocks Volatile?

A: Compared to major stock indexes and other blue-chip stocks, yes. But even here, there are degrees of difference.

Large, multibillion-dollar pot stocks might move faster than the overall stock market. But compared to smaller cannabis plays they don’t move much at all.

So, when getting in, consider the size of the company you are trading. Look at market caps. The larger usually result in lower volatility.

Though remember also, that volatility isn’t always bad. It can mean lower lows to buy and higher highs to sell. And that’s the name of the game.

Q: Is it Legal to Buy Pot Stocks at All?

A: With a federal ban on marijuana, this is actually a pretty common question. The answer is yes. You won’t face any legal troubles buying pot stocks.

And because brokers are not allowed to share which specific equities someone holds in their accounts, the ownership of cannabis-related plays won’t ever reach any potential employers or anything like that.  

Q: What’s the Best Pot Play to Buy for 2021?

A: This is the most common question you’ll see asked online. And if you’re new to investing, it’s definitely one you’ve probably asked yourself.

I’ve been scouring this market for a long time and have found my favorite cannabis play for this year. In fact, I like it so much, I put together a full report all about it.

Tomorrow, as a finale to our week’s focus on the cannabis industry, I am ready to open it up to you.

In it, I discuss why pot stocks are soaring, why they will continue to do so and finally the best way to get in.

Keep an eye out for that.

To your prosperity and health,

Joshua M. Belanger

Joshua M. Belanger

Joshua Belanger is the editor of Hot Money Trader and Wealthy Tech Investor. After leaving Wall Street on his own terms, Joshua has been providing ordinary investors blockbuster returns since 2008. In 2018, the average return of Hot Money Trader beat the markets by over 15%.
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