Investing in Cannabis? Beware These Red Flags

Due diligence is particularly critical when investing in cannabis firms given the numerous regulations the industry faces, as well as a rapidly shifting landscape.

Marijuana leaf
(Image credit: Getty Images)

The cannabis sector continues to demonstrate favorable tailwinds while indicating that there is still significant upside to come. Strong market performance – the Prime Alternative Harvest Index is up 46% year-to-date – is sure to pique the interest of investors.

Before investing in marijuana stocks, however, individuals need to be aware of the red flags that face the industry and the companies therein.

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Matt Hawkins
Contributing Writer, Kiplinger.com

Matt Hawkins is the Founder and Managing Partner of Entourage Effect Capital. He has 20-plus years of private equity experience and has founded multiple $500 million-plus alternative firms. Matt also serves on the boards of numerous cannabis companies.