Nanalyze

How to Buy Marijuana Stocks for Dummies

Since we published our first article on cannabis investing back in January of 2016, we’ve been simply floored by the overwhelming interest from the general public in “how to buy marijuana stocks”. Seriously, that’s the question that we get asked almost daily now. How can I buy marijuana stocks? The short answer is, you need to open up a brokerage account. The long answer is, what in Zeus’s name are you thinking? We’ve highlighted before the dangers of investing in over-the-counter (OTC) stocks and of the 57 marijuana stocks we identified, over 60% trade as OTC stocks. As a first time investor, do you really want to take the plunge with your hard-earned dollars and invest in one of the riskiest and most volatile investment themes there is? As our article on 57 marijuana stocks approaches 20,000 likes, it seems like you sure do. Don’t worry. You’re in safe hands.

How to Buy Marijuana Stocks

First, let’s talk about how you actually buy marijuana stocks, or any stocks for that matter. The first thing you need to do is open a brokerage account. Here are the brokerage firms we recommend:

  • Open an Ally Invest account – One of the cheapest brokers out there is Ally Invest. You can open an account with just $1 dollar deposit and trades are only $4.95 a pop. You can buy stocks on the over-the-counter (OTC) market in addition to stocks on major U.S. exchanges. You won’t be able to buy any stocks that trade on Canadian exchanges. click here to open a and Ally Invest account.

  • Open an Interactive Brokers account – This is the ultimate choice for serious retail investors but they require a $10,000 U.S. minimum deposit to open an account. You can buy Canadian dollars and then buy any Canadian stock on the Canadian exchanges they trade on. Trades run about $1 a pop. Click here to open an Interactive Brokers account.

After you’ve opened one of these brokerage accounts, we need to move on to stock selection.

Which Marijuana Stocks Should I Buy?

Now that you’ve opened a brokerage account, your next question should be “which marijuana stocks do I buy”? We’re not going to tell you the answer because we don’t know. As we type this, we own zero shares in any marijuana stock. We are also not short any marijuana stocks. We just value our hard-earned money too much to speculate in this space. If someone twisted our arms, we’d buy some of the big Canadian growers. If we truly want to invest in the cannabis theme, we’ll pony up the money needed to invest with one of the 11 VC Firms that are Investing in Cannabis. What we would never ever ever do is buy an OTC stock (that is not an ADR) with the intention of holding it long term as an investor. In 99% of all cases, your money will go up in smoke. We know much better ways to make our money go up in smoke.

Which Marijuana Stocks are Good?

Since we’re not going to tell you what stocks to invest in, you’re going to have to do some digging of your own. You don’t need to have a degree in finance, just some common sense. When you go to your dealer to pick up an eight of skunk, you never front him the money. You have him procure the sack first. You smell it, squeeze it, feel it, and eyeball it to make sure it’s an eighth. If he brings you Mexican brick weed, if the sack looks light, if the buds don’t look right, you don’t buy it.

That’s kind of how we go about evaluating stocks. We don’t just buy stocks and ask questions later. We first have a good look around. For every stock you are researching, don’t even bother going to their website. Instead, go right to their regulatory filings located online. For U.S. stocks, go to the SEC Online Filing website. For Canadian stocks, go to SEDAR. Open up the most recent quarterly earnings report. Now read our article on warning signs to look out for in OTC stocks and see if any of these red flags exist in their filing. Having a tough time? Sign up for the Nanalyze newsletter and we’ll walk you through how to do this in a future article.

What You Should Do Right Now

Now that we’ve told you how to buy marijuana stocks, we’d recommend that you don’t buy any marijuana stocks until you’ve done the following: Take 80% of the money you were planning on spending on marijuana stocks and invest it in the Vanguard Total Stock Market ETF (trades under the ticker VTI). This is an ETF that represents a basket of all stocks that trade in the U.S. Alternatively, you can invest that same money in the Betterment robo advisor platform. That is the safest and lowest cost way to invest in your future. Put some money into that account every single month. If you can afford to buy an eighth of chronic every week at $50 bones a sack, you can afford to put $50 into your Betterment account. Only after you’ve made that commitment to your future should you open up a brokerage account and invest in marijuana stocks. You’ll thank us for it.

If you pay more than $4.95 a trade, you're paying too much. Ally Invest is one of the lowest-fee brokers around so you spend less money on transaction fees and more on stocks. With more than 30 trades a quarter it drops even lower to $3.95 a tradeOpen an account and begin trading today.

  • Duncan20903

    What am I thinking? I’m thinking that the United States isn’t the only Country with a stock market. I’m thinking that Canada actually has 100% legal publicly traded companies. No “conflicts” between Federal and Provincial law. One company called Cannabis Growth Corporation has a market cap of over $1 billion. That’s in Canuckistani Pesos but in a couple of weeks it will merge with Mettrum Ltd. and the combined market cap will be over USD$1 billion. CGC trades on the TSE which is the Canadian equivalent of the NYSE. I’m thinking that Canada repealed drinking alcohol prohibition in 1925 which allowed Seagram’s the time and capital needed to service the American drinking alcohol market starting in December 1933.

    I’m constantly amazed at how many Americans appear to believe that the United States is the sum total of the world.

    • Nanalyze

      Great comments Duncan. As we said in the article, the Canadian growers like CGC would be the only marijuana stocks we would consider buying, and we may in fact look at buying some after we’ve had a chance to look at relative valuations. Yes, Americans have a bad habit of always thinking they are the center of the world… like every time someone says “I’m from New Yawk”.

  • Robin Hinton

    Wanting to invest in the marijuana stocks this is a new experience

    • Nanalyze

      Are we hearing a bit of Engrish in there Robin?

      • Robin Hinton

        English. Lol yes

        • Nanalyze

          You read the article yes? Are you going to open a brokerage account or already have one?

          • Jake

            I would like to invest

          • Nanalyze

            Jake. You have our blessing. Go forward and seek your riches!

  • Michael

    If u aren’t investing in pot stocks you my friend aren’t worth listening to.If you don’t see or understand this move them you better get my news letter.
    This move will be bigger then the internet and dot com stocks.Eventually the idiots that run this disgusting country will realize they are not getting their tax money on a billion dollar industry.Did you ever hear of prohibition?

    • Nanalyze

      Thanks for the comment Michael. We understand the opportunity, and we understand investing. Every investment comes with a risk and people need to be aware of that. As much as you think it’s easy money on the table, it’s not.

  • Sean Mv

    I’m commenting in regards to your other article that emphasizes not to invest in stocks like Cannabis Science. I also left a comment there but since there are more comments here, I thought maybe I can comment here as well. Well, Cannabis Science Inc. is recently in the news more often than many other Marijuana stocks for its joint agreement with Harvard’s Dana Farber Cancer institute. Your article says that this company is a scam, if thats the case, how can Harvard’s Cancer Institute make a joint agreement for research with them? I called Dana Farber and they confirmed that they are working with Cannabis Science inc. I also emailed a professor from Harvard that is involved with this research and he replied and confirmed as well. How would you explain that? Please explain if I’m wrong. Thanks

  • Pat

    I own several shares of a certain stock and it just had a 135% growth in the last week.

    • Traci

      I want to get started in buying marijuana stocks, but really don’t know where to start. Could you give me any pointers?

      • Nanalyze

        Traci, just navigate to the page where you posted this comment and scroll to the very top. Start reading while slowly scrolling down and you’ll find some answers to that question 🙂

  • Carlson Hendrickson

    I’m investing as a cannabis lover & business man I see the growth in this market cause weather its documented facts or not everyone smokes marijuana

    • Nanalyze

      Preach brother, preach.

  • Guy

    So your advice on how to buy cannabis stocks is to buy VTI!? Are you kidding me? Sorry but what a joke of an article

    • Nanalyze

      Thank you for the straight shooting feedback Guy. We’re hoping that some of the 9,000+ people that shared the article found some value in it.

  • Chad

    Do you have to live in a State with Legalized Marijuana in order to buy stocks in the drug ?

    • Nanalyze

      This is a good question Chad.

      First piece of advice for you is don’t take legal advice from anyone but your attorney. With that said, nothing is stopping anyone from trading these stocks. It’s essentially a grey area that is overlooked but that’s not to say this might not change.

  • joe allen

    The one’s that comment and don’t know how to write the right words (weather) probably are the one’s smoking and don’t have a dime to invest anyway.

    • Nanalyze

      It’s not possible to get so stoned that you type that badly. We wouldn’t attribute it to the marijuana but rather a general disregard some people seem to have when it comes to using the English language to communicate.

  • Dale

    I would like to invest in cannabis stock right away thanks

    • Nanalyze

      Don’t ever say that again Dale! You’ll attract all kinds of unwanted attention.

      If you’re a first time investor, and we’re going out on a limb here and speculating that you are, you do not want to focus on a theme where the majority of stocks are probably scams. Take a look at the below article which should point you in the right direction!

      https://www.nanalyze.com/2017/01/how-to-buy-marijuana-stocks/

  • Bradley

    What if I wanted to invest in a pot stock without a brokerage company? How does that work? I think with all of the fees I’m reading about with these companies, then tax on any cap gains, that I would waste time. I can go to the casino for that…

    • Nanalyze

      Investing in pot stocks is kind of like going to a casino, you’re right. As we tell people, you are better off investing in boring old dividend growth stocks.

      Investing without a brokerage company is “direct share purchase” and only some companies offer it!

  • Just curious. Buying shares prior to an IPO can be an easy way to get started. If you buy a basket
    of stocks some are probably will do o.k. and be profitable. Going with Motif Investing may be the way to go.

  • Buying stocks prior to an IPO can be a good way to buy stocks in marijuana. Motif Industry Account and buying
    a basket of stocks limit the risk of missing a few winners but it reduces the risk as well.

  • jackie k

    Hi. Is buying “direct share” the best, fastest and easiest way to get into HMMJ? I got a schwab acct and they want me to fill out another application so I can be approved for Global investing? I don’t smoke anymore but is all this going to create in me a craving for a joint (i.e. Jamaica gold, etc)? The names and varieties (thc, cbd, midnight) have sure changed. Thanks.

    • Nanalyze

      Hi Jackie! The problem is that most brokers will charge some ridiculous fee to purchase stocks on foreign exchanges. Just ask them about the fees and see. Would be great if you could let us know too! We heard Tradeking charges $75 as an example. The nice thing about IB is that they’re cheap.

      Hopefully you’re in a state where you can handle that craving! 😉

  • Lisa Patterson

    I want to buy stock in marijuana

    • Nanalyze

      It’s in the article you just read… or didn’t read.

  • Patricia Phillips

    If you open an account with Ally Invest can you buy CDC stock?

    • Nanalyze

      We don’t know what “CDC stock” is. Can you please be more specific?

  • Bob H

    Just registered at Ally Investments. Is buying of marijuana stock allow on that site? When I click on “quick trade” and select a non weed company, example Walmart, a price comes up, when I chose a weed stock, $0.00 comes up.

    • Nanalyze

      Hi Bob,

      Can you be more specific about what ticker you were trying to look up? Our understanding is that Ally lets you invest in all U.S. stocks (OTC as well). If you are trying to trade stocks on the Canadian exchange, you’ll have to ask them if that’s supported (we don’t believe it is).

      The $0.00 quote is odd and could mean that you were trying to buy outside of normal trading hours.

  • Hi,

    I’m looking for a cannabis penny stock in a company that grows industrial hemp because I’m very concerned about all the plastics we’re using, discarding, that are ending up in the oceans, and causing huge destruction everywhere. And I’d like to buy it through my Vanguard brokerage account. Can you suggest one?

    Thanks,

    Sally

    • Nanalyze

      Hi Sally. Do not ever, ever, ever touch a cannabis penny stock! We have plenty of information on this topic. Industrial hemp is not a thing yet based on our knowledge of the market!

  • Cheryl McGuire

    First of all, not every one smokes Carlson Hendrickson! Some of us need the oil for healing. I firmly believe in its healing properties. However, my husband would like to invest yet I am sceptical. Your article serves as a warning. I think most should take the advice. I’ve seen two friends lose in the market buying Canadian stocks. Beware that these stocks are extremely volatile.. We use Fidelity. Their traditional record is awesome but we don’t buy Marijuana! We buy overseas stock. In 20 years it has multiplied 5 times over and that is going through the stock market lows! We never lost when others said they lost over half. Nothing we’ve found splits to get rich quick. It just doesn’t happen that often. People who know of Microsoft and Walmart stocks cling to the memories in hopes they’ll find such a stock. This is foolish. Today if very smart investors cannot determine how to invest in an explosive stock, why would we be any better? Please err on the side of caution when investing. The stock market can take your hard earned money faster then the casino. One downturn and in a second it’s gone. My life is to short to watch the ticker tape fenatically!

    • Nanalyze

      Total words of wisdom Cheryl. Thank you for taking the time to comment.

      You should check out our article on Softbank if you like overseas stocks.

      https://www.nanalyze.com/2017/06/intro-investing-softbank-stock/

      We were quite surprised at the low interest that article received when we thought the investment thesis was so compelling (we’re holding it for long, long, term).

      Most of our portfolio is in a boring dividend growth strategy which is diversified by industry and stock. It is boring but boy does it pay a nice income stream that grows every year!

      One reason we addressed the marijuana theme (other than personal interest in the product) was that people do not understand that most of these “marijuana stocks” are scams. As you pointed out, even legitimate ones are extremely volatile and most new investors will not stomach that (we have not so found memories of ticker tape panic ourselves).

      Thank you for your wise insights!

  • Davi

    I have a probably stupid question…but I just really don’t know. In the FAQ page on Motif, it states:

    Is there an account minimum?
    You don’t need to deposit any money to open an account, but you’ll need at least $2,500 to start investing in an Ally Managed Portfolio.

    Does that mean that I need to have $2500 in that account in order to start investing in marijuana stocks?

    Thank you for your help!

    • Nanalyze

      Hi Davi,

      You mention both Motif and Ally, but your question refers to Ally. To open an Ally brokerage account, there is no minimum. You are referring to an Ally “managed account” which is similar to a robo advisor in that they invest for you. Just open a normal Ally account and you should be fine. We recommend staying away from OTC stocks because of the garbage out there like this:

      https://www.nanalyze.com/2017/07/6-cannabis-penny-stocks/

  • TJ

    Man if I could buy marijuana I would be happy. But than again with marijuana comes certain issues of local problems. I’ve lived in a really nice quiet location next to a state that reduced or decriminalized small amounts of marijuana and since than the gang looking crowd has moved, I’m guessing they will not live in nice quiet places until they can use drugs and now they’re finding a nest. Since decriminalization we have seen one disappearance of a young man displayed at the store. I’ve lived here a long time we have never had a disappearance or the thought of it. I am uncertain of the outcome of it. No news paper here and they removed his picture from the store, but I know gangs require a pop or innocent killing to prove themselves for gang initiation. But they love the drugs, especially marijuana.
    I’ve not used marijuana not even touched marijuana in over 33 years.
    Here in the state I live it is illegal. Transportation of a crumb is 10 years to life in prison.
    Even with the state next to me making it less illegal. I still can not acquire it. Only the gang members or the jail type of crowd has the stuff.
    I really really like your site who-ever writes it is like brilliant.

    • Nanalyze

      Thanks for the compliment TJ! We think decriminalization is a good thing because it tends to move the money from funding gangs to funding tax revenues.

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