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Marijuana investors looking for pot of gold
The number of US OTC stocks being traded just keeps getting higher and higher, as the legalised market for marijuana attracts investors, but what about the risk that traders could see their money going up in smoke?
Around 20 Billion OTC stocks are now being traded daily in the US, that’s more than double the total number of shares being traded on the NYSE every day.
Some of the marijuana companies generating this huge increase in share trade volume have seen their stock value rise by between 200 and 1000 percent.
So far Marijuana is only legal in 20 US states but the market is starting to move mainstream. Last week regulations were changed allowing banks to finance Marijuana commerce, previously all deals had to be in cash.
However, trading in OTC stocks, especially in companies which would be illegal in many US states, comes with a note of caution. Saxo Bank’s Head of Equity Strategy, Peter Garnry, says “The problem is that there’s no regulatory requirement for these companies to issue any financial records, what they make in revenue, what are their profit margins…so it’s a high risk investment, you don’t know what you are paying for, you are buying, in my opinion, a lottery ticket for the future.”
If more US states legalise Marijuana, then the Federal government would be under even more pressure to reform national law. Long term, the changes in marijuana law could influence European lawmakers.
02:00 minutes
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