If you’re looking for an industry that has had rapid growth on a year-over-year basis, look no further. You won’t find another industry better, or faster than the marijuana sector. GW Pharmaceuticals (NASDAQ:$GWPH), for instance, is up roughly 1,300% and Medical Marijuana on over-the-counter exchanges has had, since 2012, three different occasions where its stock have shifted between 300% and 1,000%.  All of this was accomplished in less than four years.

As one would assume, massive moves such as the ones mentioned above attract investors, big or small.  That said, never invest in a company or industry blindly, even in marijuana investment companies.  Before you start looking for marijuana stocks to invest in, here are a few things – 15 to be exact – that you should know.

1. The growth rate for marijuana is in a class all by itself

If you are looking for an industry that has a long-term growth rate, the marijuana sector is the best option available. ArcView, a cannabis research firm,  has predicted that North American legal sales will grow at 34% to $6.9 billion in 2016.  Additionally, according to investment firm Cowen & Co., there will be up to $50 billion in legal marijuana sales by the year 2026. From 2016 through to 2026,  this will lead to a growth rate of more than 23% annually.  Any investor, regardless of whether they are looking to make marijuana investments, will drool when hearing those growth rate figures.

2. The public has spoken and they want marijuana legalized

Generally speaking, the majority of Americans want marijuana to be legalized, and at the very least, they want it to be decriminalized.  Gallup, a management consulting company in the U.S who have been conducting polls on pot for roughly 50 years,  found that in 2016, 60% of respondents wanted marijuana legalized. The same poll was conducted in 1995 and only 25% of respondents wanted it legalized. Additionally, another study, which was conducted at Quinnipiac University, discovered tremendous support –  93% to be precise – for the national legalization of medical marijuana.

3.  There are two groups who still oppose the legalization of marijuana

Even though the majority of the general public want marijuana legalized, there are still two groups that oppose the drug.  Based on a 2016 Gallup survey, only 42% of respondents who are Republican were in favor of nationally legalizing marijuana. The second group who opposes legalization are seniors aged 55 and up. Only 45% of senior respondents were supportive of the idea of legalizing marijuana.

That said, it’s important to note that both groups have had a change of heart when it comes to marijuana legalization, but with the Republican party in charge of Congress, there is a chance that this will slow down marijuana’s progress on Capitol Hill.

4. There are numerous marijuana stocks to invest in

If you are looking for marijuana stocks to invest in, know that there are a number of companies to choose from. Despite there being numerous publicly traded cannabis stocks to choose from, most of the publicly traded companies have small market capitalizations. As of right now, the largest marijuana stock is GW Pharmaceuticals,  and they have a value of $3 billion.

5. The majority of marijuana stocks trade on the over-the-counter exchanges

Exchanges such as the New York Stock Exchange or Nasdaq have market capitalization and share-price requirements, therefore, most marijuana stocks will be traded on over-the-counter (OTC) boards or pink sheets.  Some investors are thrown off of the idea of trading stocks on OTC exchanges, but these exchanges have done a relatively good job improving listing and reporting standards over the past few years. That said, OTC exchanges in no way compare to the New York Stock Exchange or Nasdaq. As a result, investors struggle to find accurate information when searching for marijuana stocks to invest in.

6. Currently, marijuana stocks are losing money

Before you make your marijuana investments, know that the majority of marijuana stocks are currently losing money. At the end of the 1990s and at the start of the 2000s, losses were overlooked as many internet-based companies thought that their top of the line growth would come to save the day. This mentality resulted in the dot-com bubble. Just keep in mind that fundamentals are always important.  When researching marijuana investment companies, consider whether or not these companies will have the capital to survive the infancy and the development of the legal marijuana industry.

7. Monopolies in the marijuana industry are starting to gain hold

Generally speaking, the marijuana sector is segmented, with the smaller businesses operating on the other side of the equation, such as retail, growing, and growth light manufacturing. That said, states like Colorado have started to see a larger blend of big businesses. For example, a delay on recreational pot licenses has allowed for Colorado businesses to claim most of the licenses that were available. In Washington, similar events are occurring, as bigger businesses are starting to enter the market with a variety of product.  These events in both Colorado and Washington could mean that big businesses are on their way to taking over the industry.

8. Businesses in the cannabis sector don’t have a lot of access to financial institutions

If you want marijuana stocks to invest in, keep in mind that these stocks have little access to banking.  The federal government, which is where banks report to, still consider marijuana to be a class 1 substance. This means that giving a loan or providing a checking account to a cannabis business could be deemed as money laundering. As a result, cannabis businesses deal in cash, which limits growth and causes a major issue of security.

9.  Marijuana stocks face U.S. tax code 280E

Additionally, when looking for marijuana stocks to invest in, remember that these stocks will face the United States tax code 280E. If, for example, a normal business has started selling a substance that the federal government considers to be illegal (like marijuana), then the Internal Revenue Service prohibits these businesses from taking normal business tax deductions.  Tax code 280E is putting marijuana investment companies in a situation where they have to pay tax on their gross profits rather than their net profits. This is leaving these businesses with less money to buy a new product, hire new employees, and reinvest.

10. The Trump administration won’t be as lax on marijuana as the Obama administration

When Obama was in office, his administration let states be the ones to decide whether or not to legalize medical and/or recreational marijuana companies.  But, Sean Spicer, White House press secretary, stated that the Trump administration might start to crack down on marijuana. Even though Trump has promised that he will allow states to legalize medical marijuana, Spicer has indicated that the federal government could be more aggressive about enforcing its laws on recreational marijuana.

11. New Attorney General Jeff Sessions is opposed to marijuana and marijuana investments

Jeff Sessions, the new Attorney General, is not a fan of the cannabis industry. He has stated that ‘good people’ do not use marijuana, nor does he believe that legalizing marijuana will help to solve America’s opioid epidemic. During his confirmation, Sessions stated that he would accept the president’s approach on marijuana, but, if he could, he would get rid of any advancements that allow marijuana to expand.

12. Like Sessions, the DEA is opposed to marijuana and people who are marijuana investing

Over the summer, the United States Drug Enforcement Agency (DEA) had the chance to consider rescheduling or de-scheduling marijuana, and they decided not to.  The DEA believes that cannabis should be kept as a class 1 substance as they believe it lacks safety data,  clinical benefits, and insufficient oversight.  Many have suggested signing petitions and sending them to the DEA, but that would be a long and tiring process.

13. The industry has an annoying catch-22

As mentioned, Congress is mostly made up of Republicans, who, as noted, tend to be opposed to marijuana.  Aside from that, Congress keeping to its firm belief that marijuana is a class 1 substance has created a Catch-22 for the cannabis industry.  Despite lawmakers on Capitol Hill wanting more clinical data to aid their decision,  trials will not be able to commence so long as cannabis remains it’s class 1 substance status. For example, even though GW Pharmaceutical’s product Epidiolex has been given the go-ahead to treat two types of childhood-onset epilepsy, it is still not a guarantee that the product will be FDA approved.

14.  State-level expansion is slow

Despite having a variety of expansionary channels, the marijuana industry might have to start relying on organic growth if they want to keep their industry in the limelight. Aside from the Trump administration and the DEA on Capitol Hill, there are a number of medical marijuana states who haven’t legalized as they are under Republican control.

15. The rescheduling of cannabis is not a solution.

Last but not least, anyone looking to make marijuana investments should know that rescheduling at the federal level could be a nightmare. Moving cannabis to a class 2 substance could still create problems for the cannabis industry, even if Congress or the DEA decide to do so.

If marijuana is moved to a class 2 substance, the government would have to recognize that marijuana has medically beneficial qualities. That said, if it is given class 2 status, the FDA could then start to tightly regulate marijuana as a drug.  This means that the government would start to regulate marketing, the packaging of medical marijuana, and overseeing its manufacturing.

All in all, looking for marijuana stocks to invest in, or actually making marijuana investments, can be quite complicated as there are numerous factors to consider beforehand.  Just keep in mind that, despite the industry’s growth rates, this sector of the market can prove to be burdensome.

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