With marijuana becoming legal in more states throughout the US, it only makes sense that more companies will crop up within the industry. Like many companies, these can float shares on the stock market for anyone to invest in. However, given that this is technically a drug, it's hard to know if it is illegal to own weed stocks. In this guide, we'll outline all the legal details in simple terms.
It's possible that you could be charged with a crime if you own a part of a marijuana-related company, even if that company is operating according to the letter of the law within their state. However, there has been no instance of anyone related to one of these companies being charged with illegal activity, including investors.
How Could You Be Charged for Investing in Weed Stocks?
The argument for whether it is illegal to own weed stocks is similar to driving 5MPH over the speed limit. You may get charged, but the chances are overwhelmingly in your favor that you won't. The police and government bodies are far more interested in the blatantly illegal activity that they can prosecute.
The bottom line is that it's in no one's interest to charge investors over stocks and shares in a company that is technically operating legally within its state. One day, the laws will change and reflect this. Making it legal to own shares in a marijuana-related company alongside all sorts of other shares.
Marijuana vs CDB Stocks
Within the weed industry, there are two major buzzwords that you'll come across. These are marijuana and CBD.
CBD can be derived from both marijuana and hemp. It's largely been used in a hemp-derived form, though, and has become popular in alternative medicine. It's also used in vape devices, with many stating that it provides a natural and totally legal feeling of relaxation.
While it's legal to own shares in a marijuana-related company, you can avoid the issue of legality entirely. If you invest in a company that purely works with hemp, then there's nothing even vaguely illegal about that business.
That's because hemp is a product that doesn't count as a monitored or controlled drug. Marijuana is, even in states where it has been legalized. This is where you can minimize any risk you might feel anxious about.
All you have to do is research the business you want to invest in. As long as you can ascertain that they only use hemp, like CV Sciences or Gaia Herbs, for example, there's no more risk of legal action investing in them than investing in any other business outside of the weed industry.
If however, you want to invest in a company that produces marijuana-based products, then businesses such as Medical Marijuana and Aurora Cannabis are perfect.
The DEA (Drug Enforcement Administration) has issued some guidelines regarding CDB and its origins. Their definition of safe and legal CBD products is as follows.
“Accordingly, hemp, including hemp plants and cannabidiol (CBD) preparations at or below the 0.3 percent delta-9 THC threshold, is not a controlled substance, and a DEA registration is not required to grow or research it.“
This means that as long as a CBD product contains 0.3% or less delta-9 THC, it's legal. The DEA won't be monitoring it, and there won't be any risk of legal action. Companies producing products that adhere to this guideline will be the safest bet for an investment.
Investing in marijuana-related companies is as legal as investing in any other company, providing the marijuana-related one is operating within the laws of the state in which it's based. As an investor, the risks to you are minimal. Adding a company in the weed industry to your portfolio could see it flourish and add some much-needed diversification. These companies are still in their infancy, and the industry only has space to grow from here. Unlike investing in more established companies such as Twitch, there's a lot of potential for profit.