26 states have legalized marijuana. And with the increased awareness of its many medical benefits you may be wondering if now is a good time to invest in companies that grow and deliver this product. Not so fast! The federal government categorizes marijuana as a Class 1 drug under the Controlled Substances Act (the same category as heroin), making it illegal according to government law. This is the primary reason not to invest. If the government cracks down on the industry – and there is some indication this could be the case under the present administration – the losses could be high.

The National Institute for Health currently funds research of two chemicals, or cannabinoids, found in the marijuana plant; these are THC and CBD. The studies appear to hold great promise. Presently there are 2 FDA approved drugs that use synthetic forms of THC and CBD; synthetic, because the real thing is a Class 1 drug. If this plays out, the government may reduce the controlled substance rating, opening the door for investing without fear of legal repercussions.

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