USEFUL TIPS ON WATCHING OUT FOR FRAUDULENT ACTIVITIES IN THE MARIJUANA STOCK MARKET
Though, many opportunities and possibilities to earn in the cannabis industry (marijuana stock) is rapidly going high these recents months especially now that it has been legalized in various countries, these have made investors eager to jump into the sector as marijuana stocks have rallied in recent months. Recreational cannabis was a $6 billion industry in 2016 and, as more states move to legalize marijuana, it’s projected to reach $50 billion in annual legal sales by 2026. Nevertheless, that does not mean that investors should just dive into the marijuana stock market without watching out for fraudsters. As we all know the Internet is full of scam so it is important for investors to watch out for the fraudulent activity going on in the industry. The SEC had also warned about this particular issue referring it as a serious case, they also quoted that “Fraudsters may try to use media coverage about the legalization of marijuana to promote an investment scam”. The following are some tips to check out of fraudsters or fraudulent acts before investing into the marijuana stock anmd hemp stock market.
CHECK OUT FOR THE LEGALITY OF THE COMPANY
This should be watched out for especially in the United States. The current legal framework for marijuana is somehow confusing over there. In some states , only certain cannabinoids (compounds derived from marijuana, like cannabidiol, which is also known as CBD) are legal, some other states allow what we know as THC, that is the substance that make people high and other products that contain it, which is illegal in others.
It is important to make sure a company is in compliance with the rules and regulations of both the local and federal regulation board. If in doubt of the industry you are about to invest in it is advisable to go into the stock market and look for probably industries that sell products related to the cannabis industry or instead look for a benefiting stock to invest in.
Check for licenses
It is advisable if not important to check out the background of companies before investing in them and the licensing status of anyone recommending or selling an investment, the SEC suggests. This free tool allows users search through investment adviser firms registered with the SEC as well as FINRA’s BrokerCheck system, which verifies whether an entity is a brokerage firm.
Also important is to check and choose an exchange-listed company. As said earlier it is important for Investors to check if the company is legal and listed on a stock exchange. Investors wanting to invest in the united states can check the New York Stock Exchange companies list, which shows companies listed on AMEX,etc.
If a company is listed publicly it is required by SEC that a company should implement internal controls and practice financial reporting at all levels of the organization.
As said earlier it is better to invest into other stock especially ones related to marijuana sto k than to fall to hands of fraudsters. Just like the old saying says “A word is enough for the wise”. Invest wisely…