According to an oft-cited report by ArcView Market Research, the legal marijuana market may top $2.3 billion in sales this year. Investors have undoubtedly been keeping a close eye on this market, but note that this is the potential size of the marijuana sales. This industry faces a number of challenges that could hinder its growth, including regulatory threats and the broader debate over decriminalizing use of the drug. While restrictions on marijuana have been eased in some states, it's important to remember that the drug is illegal at the federal level. Additionally, many marijuana stocks are incredibly risky penny stocks, and the Financial Industry Regulatory Authority has even issued a warning that investors must beware of marijuana stock scams.
In the following video, part of The Motley Fool's "Ask a Fool" series, health care analyst Max Macaluso takes a close look at marijuana stocks and stresses that, while the potential market size may look attractive, investors must be wary; he believes that the industry is simply too immature to invest in today. He also sheds light on GW Pharmaceuticals (NASDAQ:GWPH), a biotech company that many refer to as a "marijuana stock."
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Max Macaluso, Ph.D. has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.