Marijuana stocks are flying high right now. There’s no reason to think that 2017 won’t be yet another great year, right? Actually, some significant threats remain for the now-thriving marijuana industry. Here are three of the biggest risks for marijuana stocks this year.
1. Too much competition
Even a fast-growing market can only support so many companies. That’s the case with pretty much any product, and the marijuana industry is no exception.
As more states have legalized marijuana use, more companies have sprung into existence. If too many companies jump on the marijuana bandwagon, though, some marijuana stocks that have skyrocketed in the past year could come back down to earth.
In the animal world, as food resources become less readily available, the animals best-equipped for survival thrive, while others die out. This is known as survival of the fittest — and we could see it apply to marijuana stocks in the not-too-distant future. The limited resources of the market won’t be able to support every new entrant.
Understand, though, that the stocks most affected by this will be those of companies that simply sell medical or recreational marijuana. Companies developing marijuana-based drugs that go through the U.S. Food and Drug Administration (FDA) regulatory process should be spared.
GW Pharmaceuticals (NASDAQ:GWPH) is a good example. The company is moving forward with plans to seek FDA approval for Epidiolex for the treatment of Dravet syndrome and Lennox-Gastaut syndrome (LGS), two forms of epilepsy. GW Pharmaceuticals’ fortunes are tied to winning regulatory approval and launching Epidiolex successfully. The flood of companies entering the broader marijuana market won’t impact GW at all.
Read the rest of the story at marijuanastocks.com
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