While I have no interest in marijuana as a product, and I’m probably slightly against its legalization, the rapid spread of legalization to three states (CO, WA, and CA, albeit for “medical” purposes only in the last case) is very interesting. Equally interesting is the efforts by many individual investors to cash in on this industry by investing in stocks related to it.
At this point, there are no major pot stocks traded on the stock exchanges, which means that unfortunately investors are forced to turn to the extremely shady area of off-exchange stocks such as those trading on the pink sheets. While some companies, notably ADRs, on these exchanges are legitimate, the vast majority are very close to being fraudalent. As a result, investors take considerable extra risk by investing in these firms.
That said the new JOBs act and the (presumably) forthcoming rules from the SEC related to crowdfunding provide an alternative for investors. My recent article, discusses this opportunity.