Legal Marijuana is the fastest growing industry in the United States. In 2016, cannabis sales in North America went up 30% from 2015 to reach $6.7 billion.

And looking into the future with more states, Canada and countries around the world making their way toward legalization this already extraordinary speed of growth is actually set to pick up. Canada’s recent decision to legalize recreational cannabis by next summer is expected to create a $23 billion industry that could be bigger than beer and wine.

Investors are clamoring for marijuana stocks. Marijuana stocks in the United States have been among the most heavily traded securities this year.

Yet, while I do see great opportunity, investing in cannabis stocks also creates new challenges. At the top, there are more than 300 cannabis stocks to choose from. It’s difficult to separate winners from losers.

From there, buying, selling, and owning marijuana stocks is very different than investing in blue-chips such as Apple, and Amazon.

Here’s a look at 7 fundamental tips that will help you understand the basics to invest in marijuana stocks

Marijuana Stocks And What You Need To Know

1. Focus On The Largest Companies In The Sector
The cannabis sector is loaded with micro- and nano-caps. These are companies with market capitalizations of less than $250 million and $50 million, respectively. On one hand, these young companies offer tremendous growth potential. But on the other hand, they are prone to bouts of extreme volatility. That volatility can be driven by unexpected fluctuations in sales and earnings growth. It’s also just a lot easier for big traders with billions to push around a $50 million stock. Focusing on the biggest companies in the cannabis sector helps moderate both issues.

2. Go International
Some of the best opportunities in cannabis are happening outside the United States. For example, Canada is set to legalize recreational cannabis by next summer. Israel has legalized medical cannabis and is moving toward legalizing recreational. Australia voted to legalize medical marijuana in the fall of 2016. Local companies listed on these countries’ stock exchanges are scrambling to cash in.

3. Diversify
It’s going to be difficult to separate winners from losers in the young cannabis industry. Some of these companies will grow into global leaders while others will fail and file for bankruptcy. This is the reason I recommend diversification. Owning a basket of marijuana stocks means that if one goes bust, your portfolio will survive.

Read the full story at marijuanastocks.com

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