For years, investing in the US cannabis industry has been frustrating to say the least.
The legal cannabis industry has generated billions of dollars annually in sales, not to mention hundreds of thousands of jobs, and is accepted in most states. Despite the massive growth, everyday investors haven’t been able to benefit from investing in several of the market’s biggest players.
There were many serious barriers in place, most especially the fact that cannabis is federally illegal in the United States. Even if cannabis were legalized either for medical or recreational use, being under the Schedule I substance category resulted in numerous legal hurdles for investors, businesses, and even banking.
In addition, since US cannabis companies directly touch a product that was considered federally illegal, NYSE, the Nasdaq, and other major stock exchanges couldn’t list these cannabis stocks. Most operators had no choice but to trade on the Canadian stock exchange or other over-the-counter markets. Furthermore, most brokerage platforms usually didn’t offer over-the-counter stocks and even make them difficult to trade in.
That’s why ordinary investors couldn’t easily buy shares from major US cannabis companies.
The complicated financial and investment landscape also resulted in a divide between cannabis investors and consumers. While millions of Americans could easily purchase cannabis in their home states, hardly anyone was able to easily invest in these companies that were responsible for making and selling the very products they used. To do so, investors had to open specialized brokerage accounts, learn how over-the-counter trading worked, and accept high volatility with lower liquidity. These steps were a lot for the average person to do, and it simply was seen as not worth the effort.
That might change soon.
Can Robinhood Make Investing In The US Cannabis Market Simpler?
Robinhood is a popular US-based investment app that allows everyday individuals to buy and sell stocks straight from their smartphones or computers. It offers commission-free trading not just of stocks but also ETFs, cryptocurrencies, options, and retirement accounts.
According to a recent article on Yahoo Finance, Robinhood has been adding US cannabis stocks to the platform, thanks to the anticipated federal government reforms.
According to observers, the article noted that some major players including Trulieve (TCNNF), Green Thumb Industries (GTBIF), and Curaleaf (CURLF), were already added to Robinhood at the time the article was written. While Yahoo reached out to Robinhood for a comment, they unfortunately didn’t respond.
Last April, the Trump administration reclassified cannabis to Schedule III, and the June 29 hearing will dictate whether the decision will expand to recreational cannabis. The current optimistic atmosphere is now making investing more accessible to the masses.
It’s also interesting to note that cannabis companies were already listed on Robinhood for some time, though they weren’t tradable tickers, which meant that the platform users had visibility into the prices though they were unable to make orders.
Retail Investor Access Might Be A Turning Point
Given that the country’s sentiment will be changing as we approach June 29, we can expect numerous positive outcomes, especially as we see better access for retail investing.
For one, cannabis companies can expect more profit because the cost of capital will be reduced. They’ll be able to move their listings to liquid stock exchanges, as long as the NYSE or Nasdaq allows it. The tax rule that prevents them from making deductions will also be eliminated.
Should the DEA decide that recreational cannabis will eventually be recategorized as a Schedule III substance, we may see even more cannabis businesses on the stock market.
Greater accessibility will also significantly increase the liquidity of cannabis stocks on the market. When there are more investors buying and selling shares, the stock prices will be reflective of accurate company performance, and trading will be much simpler. Added liquidity will also attract institutional investors that may have avoided cannabis stocks in the past because of restricted market participation.
Furthermore, better access to capital will also benefit cannabis companies themselves. Cannabis operators require funding to grow cultivation facilities, invest in research and development, launch dispensaries, develop products, and so much more. It takes a lot of money to compete in the rapidly evolving state markets, so a broader investor base will make raising capital less cumbersome, expensive, and complicated while providing operators with the resources they need to grow.
Last but not least, Robinhood’s move to open up stock trading for cannabis businesses represents a truly revolutionary shift. As major cannabis companies appear on one of the country’s most popular trading platforms, it means the market sees cannabis as a legitimate industry instead of one that is controversial or niche.
CONCLUSION
As of now, cannabis still faces some types of regulatory uncertainty, though the direction that the cannabis industry is headed is becoming clearer.
Thanks to improved accessibility through trading platforms such as Robinhood, along with the federal reforms underway, cannabis businesses may soon welcome a new wave of retail investors and capital. The industry has operated far too long under extremely strict conditions that other sectors weren’t subject to, so these developments represent so much more than stock trading; they are a sign of growing legitimacy.
Over the past few years, we’ve already seen how cannabis has transformed many other industries, including medicine, consumer goods, and even entire state economies, despite financial and legal barriers. Investors no longer need to wonder if cannabis is “real”; it’s a real part of the consumer sector and an increasingly important segment of the American economy today. The more pressing question now is whether investors will acknowledge the opportunity before broader reforms and mainstream investor access change the industry’s landscape entirely.
CANNABIS INVESTING MISTAKES, READ ON...
