Cultural attitudes toward cannabis have been in a state of rapid change over the last few decades in America. Currently, 33 states have legalized some form of marijuana, and 1 in 4 Americans live in a place where marijuana is allowed for recreational use. That patchwork of legality presents a challenging business climate for the cannabis industry, but it’s still attracting plenty of companies looking to serve this newly legalized market — and many of them have publicly traded stocks that any investor can buy.

But are Americans ready to seriously consider investing in the cannabis industry, which sells a product that’s still illegal at the federal level? Alongside all of the normal concerns that one should have about a nascent, unprofitable industry, the additional layer of uncertainty driven by marijuana’s murky legal status remains a primary issue. But then again, America has rarely found itself with a lack of speculators who are willing to look past those risks and chase what could be a unique opportunity for enormous growth.

The question of Americans’ attitudes toward the cannabis industry was at the core of a survey conducted by GOBankingRates. The survey asked over 800 investors about their thoughts concerning marijuana and whether cannabis stocks could become a part of their nest egg. The results demonstrated that, despite people’s concerns about the future of the legal cannabis industry, about half of Americans have already started making investments or are open to investing in pot stocks down the line.

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GOBankingRates’ survey about cannabis investing covers the following topics:

Key Findings

Here are some of the most intriguing takeaways from the survey results:

Almost 1 in 10 Americans were already investing in cannabis stocks. However, about 51% said they had no plans to invest in this budding industry.

However, about 51% said they had no plans to invest in this budding industry. Two-thirds of those surveyed thought marijuana should be legalized at the federal level. A whopping 70% of respondents ages 18-34 supported the legalization of marijuana, whereas nearly half of respondents ages 65 and older were against it.

A whopping 70% of respondents ages 18-34 supported the legalization of marijuana, whereas nearly half of respondents ages 65 and older were against it. About one-third of survey respondents said they would start investing in cannabis if marijuana were legalized, but another third said they would never invest in the industry regardless of its legal status. Of those who were open to investing, 27% said they would invest $1,000 or more.

but another third said they would never invest in the industry regardless of its legal status. Of those who were open to investing, 27% said they would invest $1,000 or more. Only 10% of Americans view pot stocks as a safe investment. Since the cannabis industry’s future appears to be murky, investors might want to diversify their portfolios using safe investments with high returns.

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49% of Investors Are Open to Cannabis Stocks — or Already Investing

A majority said that they would never be ready to invest in cannabis stocks. However, despite the uncertainty surrounding the industry, about 10% of investors have already decided to take the plunge. With another 40% saying they would remain open to investing in pot stocks at some point in the future, the investing public appears to be evenly split over the cannabis industry — which is arguably an impressive vote of confidence in a new industry operating in a very uncertain legal landscape.

“In many nascent industries there can be speculative bubbles,” said Robert R. Johnson, a professor of finance at Creighton University’s Heider College of Business. “If one’s timing is right, there is potential for very high returns in a short period of time in speculative bubbles. Conversely, if one’s timing is wrong, fortunes can be erased in speculative bubbles.”

There appears to be a general acceptance of cannabis as a legal enterprise across all age groups, save for one — those 65 and older. Among this age group, nearly two-thirds of respondents said they would never consider investing in the cannabis industry. And, while men were slightly more likely than women to already be investing in pot stocks, the proportion of men and women who didn’t think they would ever invest in the industry was about the same, at 51% and 52%, respectively.

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Would You Ever Consider Investing In Cannabis Stocks or Other Securities? Demographic Answer Choice Yes, I currently invest in cannabis stocks or other securities I don’t currently but I’m open to it No, and I don’t plan to invest Ages 18-24 11.8% 38.51% 49.69% Ages 25-34 13.48% 41.57% 44.94% Ages 35-44 8.91% 47.52% 43.56% Ages 45-54 8.7% 38.51% 52.8% Ages 55-64 10.49% 42.59% 46.91% Ages 65 and older 4.85% 30.91% 64.24% Male 11.6% 37.78% 50.62% Female 7.37% 40.55% 52.07%

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What Else Would It Take for More Americans To Invest In Cannabis?

While seeing a change in the federal law would clearly make the cannabis industry more appealing to Americans — in fact, 35% of investors agreed with this — GOBankingRates found other potential changes that would incite them to get involved with pot stocks. Nearly 1 in 5 Americans said they would consider investing in pot stocks if a financial advisor recommended it, and 16% said they might start investing if more cannabis companies went public.

However, about one-third were unswayed by any of the potential changes to the cannabis industry or other factors. Making up most of this segment were respondents ages 65 and older. About 48% of respondents in this age group said they would never invest regardless of any change in legal status, compared with only 35% of respondents ages 55-64 who agreed with that statement. At the same time, Americans ages 65 and older were more likely to say that they’d invest in the cannabis industry if a financial advisor recommended it.

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Men were consistently more open to investing in cannabis than women, with 41% of female respondents claiming they would never invest in the cannabis industry versus only 32% of male respondents. For both men and women who were open to investing in pot stocks, the legal status of marijuana at the federal level was the most important factor under consideration.

Would Americans Start Investing or Invest More in Cannabis If Any of the Following Were To Happen? Answer Choice Women Men Yes, if usage becomes legal at the federal level 31.57% 38.52% Yes, if the cannabis industry becomes more profitable 12.67% 16.54% Yes, if a financial advisor recommends it 16.82% 21.98% Yes, if more companies in the industry go public 14.06% 19.01% Yes, if the industry loses its negative stigma 8.99% 16.05% Yes, if my friends and/or family start investing 4.38% 7.65% No, I would never invest in the cannabis industry 40.55% 32.10% Other 4.61% 4.69% Note: Respondents could select more than one answer.

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More Would Invest If Marijuana Was Legalized By the Federal Government

The inconsistent legal status of cannabis across the country truly appears to be the primary concern for people who are otherwise open to investing in pot stocks. Since marijuana is still on the Drug Enforcement Administration’s list of Schedule I drugs, American marijuana companies are operating in a gray area, according to Kendall Almerico, legal counsel for Goldenseed, a cannabis company based in Santa Cruz, California.

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“Yes, they are operating legally within the state where they are regulated. But, they are also operating illegally under federal law, even in those states where marijuana is legal,” Almerico said. “The good news is the federal government is pretty much ignoring cannabis activity in states that have legalized cannabis. Because of this uncertainty, there is both a big upside if things go very well in the industry, and big downside if the federal government decides to suddenly change course and starts to enforce federal law.”

While there was strong support for legalizing cannabis at the federal level, GOBankingRates’ survey also revealed that the amount of money Americans are willing to invest in cannabis remains on the low side. About 1 in 5 investors said they would invest less than $100 initially, and 16% said they would invest between $100 and $499. Taken together, the data shows that some investors are ready to give serious consideration to cannabis companies, but there’s also some healthy skepticism — both in how much they’re ready to invest and the conditions needed for them to start investing.

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How Much Money Would You Initially Invest In the Cannabis Industry? Answer Choice Response Rate Less than $100 20.50% $100-$499 15.73% $500-$999 7.87% $1,000-$4,999 12.99% $5,000-$9,999 2.86% $10,000 or more 5.48% I would never invest in the industry and/or stocks 34.56%

However, Americans’ attitudes toward investing in cannabis may also change indirectly as a result of legalization. Having marijuana legal at the federal level would open up more business opportunities for other countries seeking to enter the U.S. cannabis industry. If cannabis were to become legal at the federal level in the U.S., Canadian licensed producers would likely begin to ship their products into the country, said Michael Cammarata, the CEO of Neptune Wellness Solutions, a Canada-based health and wellness company that specializes in cannabis and industrial hemp extraction and other products. He added that Canadian LPs already have plans to do so despite the precarious legalization timeline.

“Companies will be on both sides of the border no matter what,” Cammarata said. “The upside here is despite legalization, investments in the industry are still worthwhile.”

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Americans See Potential in the Cannabis Industry

It should come as no surprise that a plurality of survey respondents said the cannabis industry is growing fast. This impression of pot stocks helps explain why investors are still interested despite the risks. However, one-third of respondents made sure to note the uncertainty surrounding the industry, and roughly 1 in 4 identified the negative stigma attached to cannabis.

Younger people were much more likely to identify the industry as growing fast — at least 40% of every age demographic, save for those 65 and older, agreed — but two age groups were particularly bullish. Nearly half of respondents ages 35-44 and respondents ages 45-54 felt that the industry was fast-growing. Additionally, men saw much greater potential in the cannabis space. Male respondents were almost twice as likely as female respondents to say that cannabis stocks are risky but provide opportunities to earn big returns, at 25% and 14%, respectively.

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The Future of Pot Stocks — and What It Means for Your Portfolio

It’s impossible to say at this point what the future holds for the legal cannabis industry in the U.S. as piecemeal, state-by-state legalization efforts continue. However, it’s clear that a significant portion of investors are showing an early interest in the cannabis industry. It seems to be a very cautious interest — and one that doesn’t involve investing large sums yet — but this interest is shared by nearly half of investors.

That said, the survey results also reveal a substantial group of Americans who remain staunchly opposed to ever investing in the cannabis industry — even if it were legalized by the federal government. These holdouts, many of whom are 65 and older, aren’t ready to put their savings at risk, even though some of them acknowledge the significant potential for growth in the industry.

“Investors and speculators alike should recognize that cannabis is a commodity like anything else,” Johnson said. “As cannabis is legalized and mainstreamed, more and more growers will plant cannabis. As more cannabis is supplied, its price will fall.”

If you’re open to expanding into a new area like pot stocks, you should take the time to carefully consider your investment options, which can help you reduce the overall risk to your portfolio.

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“The most important step in reducing risk is buying an ETF that contains as many high-quality cannabis stocks,” said Jon Vlachogiannis, the founder of AgentRisk, a wealth management product that’s driven by machine learning and active management strategies. “The space is very volatile and investing in a single cannabis stock is like playing Russian roulette.”

Beyond investing in a good exchange-traded fund, Vlachogiannis stressed the importance of having a balanced, diversified portfolio.

“Believing in the potentiality of a market is healthy but placing all your eggs in one basket is a terrible investment proposition,” he said. “The saying is true: Don’t get high on your own supply.”

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Chris Jennings contributed to the reporting for this article.

Last updated: Dec. 2, 2019