The Smart Way to Invest in Marijuana Stocks

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As of Wednesday, Oct. 17, 2018, recreational marijuana sales are under way to adults in licensed dispensaries throughout Canada. This makes our neighbor to the north the first industrialized country in the world to have given the green light to recreational pot and only the second nation overall, behind Uruguay, to do so.

What does legalization mean for the legal cannabis industry? Although estimates tend to vary wildly, Wall Street appears to be looking for $5 billion or more in added annual sales from domestic demand and via exports once things are fully up to speed. This exceptionally rapid sales growth is expected to translate into healthy profits for the industry.

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Investing in pot stocks made simple

But as investors, we also know that not every marijuana stock will be successful. Some clear winners will emerge, as well as some monumental flops. We also know that, given the euphoria surrounding legalization in Canada after nine decades of adult-use prohibition, volatility will be high (pun intended). This makes investing in the cannabis landscape particularly risky.

Thus, investors must make a choice: Take part in a burgeoning, high-growth industry or stick to the sidelines to avoid the volatility and possibility of loss?

The good news, however, is that there is a smart way to invest in marijuana stocks. As long as you approach your investments with the following four factors in mind, you should be primed to succeed over the long run.

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1. Think long term

The single most important suggestion I can pass along about investing in the cannabis industry is that you’ll need to be patient. Even though marijuana stocks have delivered incredible returns since the beginning of 2016, all next-big-thing investments need time to mature, and the cannabis industry will be no different.

For example,

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