Understanding what impacts canopy growth stock price is important. Cannabis growth stocks (CGC) basically fall into three categories:
These stocks are offered by companies involved in the cultivation, sale, and distribution of cannabis to individuals and businesses. Legal restrictions in the United States prevent growers from becoming large players in marijuana stocks in this particular niche. In Canada, however, growers have enjoyed significant market caps since the legalization of cannabis in October 2018.
Cannabis biotech stocks are available from companies that develop medical cannabis products and deliver them to consumers and businesses. Many of these companies don’t actually deal with cannabis in its raw form, opting to specialize in synthetic cannabis products and formulations. Even so, cannabis biotech stocks are still considered cannabis stocks.
These stocks are offered by companies that do not grow or process any type of cannabis. Instead, they supply cannabis growers and manufacturers with the tools and materials they need to cultivate or process cannabis. These companies typically manufacturer or distribute lighting systems, hydroponics, soil, and fertilizers, all of which are commonly used for growing cannabis on a commercial scale.
Mitigating the Risks of Trading in Cannabis
Trading in cannabis stocks has its share of risks due to the relatively recent and rapid growth of the cannabis industry. Because the prices of stocks have increased so quickly, the current valuations don’t necessarily reflect the growth and profitability potential of industry players. Much of the time, it is CGC stock news that causes market movement in the industry.
As in any other trading segment, mitigating the risks of trading in cannabis stock involves doing plenty of research and determining where the most risks and potential for profit lies. For example, cannabis companies based in Canada are generally lower risk than U.S.-based companies due to the more tolerant legal situation.
You should also consider your risk tolerance and your financial goals. Cannabis is a fairly volatile market, so you will have to decide whether or not you are comfortable with the higher risk.