Though there is a slowdown in the economy because of unprecedented global events, surprisingly, the cannabis industry is no signs of slowing down. If you are an entrepreneur, you might have checked the cannabis industry and may have shown interest in putting your investment in the fastest growing industry in the world.

You are new, and you have no idea in the cannabis industry. Well, don’t worry because this article will give you helpful tips on how to invest in marijuana penny stocks. Just like in any business, you have to start small and get to know the industry very well. 

Investing in the Cannabis Industry

Investing in a cannabis or marijuana business or stocks can be risky because of its federal status; it may entail lots of works and paper works but if you can endure it is all worth it. To give you a picture of the global status of the cannabis economy, in 2019, the global spending on cannabis shot up to a high 46%. A forecast of the worldwide revenue showed that by 2024 the spending on marijuana would reach a massive $103.9 billion. 

As of the moment, there are about 33 states and Washington D.C. that have legalized the use of marijuana. It is gaining positive votes to other states and countries, so it will no longer a surprise if the number of states and countries will increase by the end of the year. Globally, the use of marijuana is legal in about 40 countries.

These facts will give a picture of what the cannabis economy is like. You are investing and putting your money, so it is important to know the industry where you will be putting your money. 

How to Invest in Marijuana Penny Stocks?

Before further proceeding to the science of investing marijuana penny stocks, let us know what penny stocks are? Penny stocks are also known as micro-cap stocks, small-cap stocks, nano-cap stocks, and over-the-counter stocks. They are stocks of small companies that trade for less than $5 or some trade for less than $1 per share.

Marijuana penny stocks trade like other industrial penny stocks on different exchanges. If you want to invest in marijuana penny stocks, you have to:

• Create a trading plan – A trading plan is more like a business plan. It is the systematic planning of the methods that you will take into consideration and factors like time and your objectives. As an investor, your trade plan will guide you towards any of your decision.
• Understand penny stocks and how it works – Penny stocks are small companies that have little or no financial background. They trade off-market exchanges because blue-chip stocks have a strict listing requirement for companies who are trading for them. They will delist companies who will not be able to comply with their trading requirements. They will delist a company’s shares if it is not able to maintain a minimum closing bid of 41 per share within 180 days.
• Search for Trading Candidates – Understanding how and where to trade penny stocks is very important as the next step would be determining what stock you are going to trade. You can search for marijuana penny stocks, but some tools can help you in searching. One of the popular tools that are used in screening is those found in OTC market websites. You can search for marijuana stocks with a price of under $5. It will easily give you the results narrowing down the trading universe. Study and filter the list depending on your trading plan or whatever strategy that you have. With the list of marijuana penny stocks in your hand, you can study the company and check if it will be able to work out with your trading plan.
• Open a Trading Account – Now that you can understand marijuana penny stocks and have selected marijuana penny stocks that you want you to invest in, its time to open an account. There important factors when you open a trading account. Make sure to take into consideration the ease of transferring funds, the fees, and of course, customer service. A per-share structure may be the best option if you are buying a relatively low number of shares. You can hire brokers to help you in this area. Make sure to look for a broker who specializes in marijuana penny stocks.
• Understanding the Risk Factors – The moment you decided to invest in marijuana penny stocks, you should and must e aware of the risk factors in investing in such small companies. You have to understand the risks involved. 

In investing in penny stocks follow these four rules to keep your investment safe:

• Put a limit on your holdings. Starts small and see where it leads you. Stock not more than 2%.
• Check for trading volumes and liquidity. Though you may have made a successful investment, you must have enough liquidity and trading volume so that you can trade-in.
• Be knowledgeable about when to sell. Marijuana penny stocks are often short-term trades. If you have a good profit over a short period, you can book it now instead of waiting for profits. You’ll never know if it is going to materialize as the penny stocks are unpredictable.
• Look for high-quality stocks – You must be very careful in choosing for prospects. It would be best to do a background check and look for ventures that are run by managers who have credible backgrounds. These companies are not so bad. Some of them are once leading companies that may have just fallen because of financial reasons, and they need investors. That’s where you come in. 

Knowing how to invest in marijuana penny stocks is an eye-opener and perhaps a good starting point for a beginner investor. Can you make money out of it? The answer is yes. The key to a successful investment in marijuana penny stocks is knowing the industry that you are putting your money to. Do comprehensive research and study the market. If you are willing to take the risk, then you have to be prepared to make that investment.