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I have seen countless websites, ads, and have had people trying to sell the idea of investing money in to so-called "lucrative" Cannabis/marijuana stocks. The idea here is that marijuana is a growing business in the U.S., and thus it's highly success and the ROI on such stocks/investments are said to be extreme due to the booming uprise of marijuana legalization, growing, businesses/selling, and etc. I am wondering if this is merely exaggeration or if there's a real niche investment opportunity here.

The so-called websites are often pushy and talk about how marijuana investors have made "millions by investing small funds in to booming marijuana stocks." Some claim that anyone is guaranteed to make high returns due to the increases in marijuana legalization and stores & expanding outreach. I'm guessing this is based on the fact that a marijuana growing business can make big money sometimes.

Is there any truth to this, or is this another niche scam that's been brewing the last few years?

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    Never ever ever ever invest in individual companies unless you can verify that they are legitimate and have confidence in their business model. Anything else is as bad as a lottery ticket. If there were millions to be made, why would they be peddling to strangers instead of investing their own money? – D Stanley Feb 6 '17 at 3:53
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    Among other things, you should consider the possibility that a Republican-controlled Department of Justice may have slightly different policies on marijuana than Obama's did. – ceejayoz Feb 9 '17 at 3:07
  • A Rebulican-controlled Department of Justice appears to have had other priorities the last couple of years. – DJClayworth Jun 2 '19 at 20:39
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Is there any truth to this, or is this another niche scam that's been brewing the last few years?

While it may not be an outright scam, such schemes do tend to be on borderline of scams. Technically most of what is being said claimed can be true, however in reality such windfall gains never happen to the investors. Whatever gains are there will be cornered by the growers, trades, other entities in supply chain leaving very little to the investors.

It is best to stay away from such investments.

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    The more hype is being generated by the person selling something, the more the buyer should beware, as a rule of thumb. – Mindwin Feb 6 '17 at 12:26
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Any advertisement for a "business opportunity" is nearly always a scam of some kind. In such deals, the seller is the one making the money. They rely on the fantasy of the average person who imagines themself with a profitable business.

Real businessmen do not get their businesses from flyers on the sides of telephone poles. Real businessmen already know every aspect and detail of their business already. They do not need to pay some clown $10,000 to "get them started".

If you are reading such advertisements, it means you have money, but do not know what to do with it. Although I cannot tell you what to do with your money. I can tell you this: giving it to somebody who advertises a "great business opportunity" would be a mistake.

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There are some promising investments in this field but most of them are absolute scam, trying to exploit the positive attitude toward this field from uneducated and not sophisticated investors. Every time you make a decision to invest your money in a specific stock, you should make a clear and very detailed due diligence on the company you want to invest. If it is over-hyped than there is 99% chance it is not worth your time and money and it is not possible to make an overall judge of the entire field. I can name few companies that are genuinely taking off in this field, but many others are just con-artists shell companies. Be very careful when dealing in such fields!

  • Hi @Nikolas84 - it maybe useful to add examples of due diligence or some possible steps or indicators to look for. – perennial_noob Jun 2 '19 at 3:15
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Yes, there are some simple steps everyone can do. Of course for people without enough experience in investment analysis it can be hard at first to get to the right decision, but it definitely does not require any specific skills or education. For example here is a possible procedure - check if the company is public (this is needed in order to have more information available). I won't go here where to directly find the quarterly data, but there are tones of review sites like SeekingAlpha, Stocks2Own, Gurufocus and so on where you can find reliable reviews and data interpretation. You can check the financial statements for the company you research and check key metrics. If you can't do it on your own, than you can rely on others reviews and research articles or ask friend who work in the investment field. Never invest on a single recommendation only! Cross check everything multiple times and make a better picture with the extracted data. Check who is in charge of the company, who is in management team, what is the structure of the ownership, etc. etc.

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