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Beware of Marijuana Stocks
Now that Colorado has legalized marijuana for recreational use, should you jump in with both feet or beware of marijuana stocks. We are, by the way, discussing investment in marijuana related businesses and not your own recreational use! Is there money to be made investing in marijuana stocks? Fundamental analysis of these stocks is, well, fundamental. Marijuana is legal for medical use in California and New York may also make medical marijuana legal. Colorado is the first to legalize the plant for recreational use but others may follow. Which businesses will be profitable and which will be able to scale up when the opportunity arises? But, before looking at a couple of stocks, here is a bit about the law in Colorado.
Colorado Marijuana Use Law
Colorado has two sets of laws regarding marijuana. These have to do with recreational use and medical use.
Colorado Amendment 64 states:
Adults aged twenty-one or older can grow up to three immature and three mature cannabis plants privately in a locked space, legally possess all cannabis from the plants they grow (as long as it stays where it was grown), legally possess up to one ounce of cannabis while traveling, and give as a gift up to one ounce to other citizens 21 years of age or older. Consumption is permitted in a manner similar to alcohol, with equivalent offenses proscribed for driving. Public consumption remains illegal. Amendment 64 also provides for licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores.
This law allows for sales of marijuana for recreational use, taxation of profits from these facilities, and various ordinances relating to such establishments. It is the potential for profit from recreational use of marijuana that is of primary interest for those investing in marijuana stocks. Beware of marijuana stocks that do not comply with the law in Colorado.