Steven Gormley is CEO at Radiko Holdings. He's a celebrated expert in the legal marijuana sector and his analyses have been featured prominently in media outlets like Forbes, the Wall Street Journal , and Marketwatch. Steven is also Chief Operating Officer of Silverback Investments, Inc, a management company in the cannabis space.

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 3

Beyond the Book 4

Where to Go from Here 4

Part 1: Getting Started with Cannabis Investing 5

Chapter 1: Taking the Nickel Tour 7

Weighing the Pros and Cons of Investing in Cannabis 8

Pros 8

Cons 9

Deciding Whether to Invest in Businesses That Touch the Plant or Those That Don't 11

Exploring Your Investment Options 12

Starting your own business 12

Investing in cannabis real estate 13

Buying and selling stocks 14

Diversifying with exchange traded funds and mutual funds 15

Considering private investment opportunities 15

Finding Investment Opportunities 16

Researching Investment Opportunities 17

Planning Your Investment Strategy 19

Investing in a Cannabis Business 20

Chapter 2: Exploring Cannabis Business Types 23

Choosing Sides: Medical or Adult-Use? 24

Investing in medical marijuana 24

Investing in adult-use marijuana 25

Recognizing Different Cannabis Business Types 26

Cultivation 27

Manufacturing 28

Processed product brand 30

Retailers/dispensaries 30

Device makers 31

Considering Ancillary Businesses 31

Breweries 32

Banking, payroll, and other cash management services 32

Blockchain and other technologies 34

Delivery services 34

Grow equipment manufacturers and suppliers 35

Marketing, public relations, and advertising firms 35

Professional employer organizations 36

Pharmaceutical and biotech companies 36

Real estate 37

Security services and security equipment suppliers 38

Software companies 38

Chapter 3: Understanding the Political, Cultural, and Regulatory Landscape 39

Recognizing the Impact of Laws on the Industry 40

Getting up to speed on U.S federal law and enforcement 40

Brushing up on state cannabis laws 44

Considering local laws, too 45

Examining cannabis laws in other countries 46

Riding the Waves of Politics and Culture 46

Checking the nation's pulse 47

Debunking misconceptions of cannabis and users 49

Examining activism 50

Tuning into cannabis culture 52

Accounting for the High Costs of Doing Business 53

Regulatory and compliance costs 53

Federal, state, and local taxes 54

Security costs 55

Chapter 4: Sizing Up the Risks and Rewards of Cannabis Investing 57

Weighing the Risks 58

Falling victim to con artists 58

Investing in an overvalued company 60

Accounting for dilution risks 61

Weighing the risks of potential commoditization 62

Recognizing the possibility of changes in how federal marijuana laws are enforced 63

Considering the impact of state and local regulation and enforcement 64

Evaluating risks associated with obtaining banking and financial services 65

Anticipating the impact of possible supply and demand imbalances 65

Considering the possibility of business failure 67

Assessing the Potential Rewards 67

Deciding Whether Investing in Cannabis is Right for You 68

Considering your investment goals 68

Assessing your own risk tolerance 69

Part 2: Doing Your Homework 71

Chapter 5: Exploring Your Investment Options 73

Comparing Public versus Private Investment Options 74

Understanding how companies raise capital 74

Investing in private companies 76

Investing in public companies 78

Investing Domestically or Abroad? 79

Investing in Cannabis or Ancillary Businesses? 81

Buying and Selling Cannabis Stocks 83

Going mainstream with listed stocks 83

Bargain hunting with unlisted, over-the-counter stocks 84

Diversifying with exchange traded funds 84

Betting on an index with exchange traded notes 86

What about mutual funds? 86

Buying and selling shares of Canadian cannabis companies 87

Investing as a Venture Capitalist 88

Chapter 6: Digging Up Cannabis Investment Opportunities 89

Using Online Investment Tools and Apps 90

Cannabis Stock Trades 91

Yahoo! Finance 91

Morningstar 92

FINVIZ 92

[...] 93

FeeX 93

FRED 93

The Marijuana Index 94

Marijuana Stocks 94

Barchart 94

Apps 95

Staying Abreast of Cannabis Industry News 96

Scoping Out Opportunities in Exchange Traded Funds 100

Finding Private Equity and Venture Capital Funds and Firms 101

Getting Investment Leads from a Broker 102

Chapter 7: Researching Cannabis Businesses and Stocks: Fundamental Analysis 103

Grasping Fundamental Analysis Basics 104

Researching Any Company You're Thinking of Investing in 106

Assessing the management team 106

Evaluating the company's financial health 109

Evaluating startups and investments in licenses 111

Looking at the company's business strategy 112

Checking out the company's competitive position 115

Checking any insider buying or selling 116

Looking into warrants and convertible securities 117

Following analyst coverage and conference calls 119

Digging up dirt 120

Evaluating Cannabis Cultivation Businesses 121

Sizing up the grow master 121

Checking a grower's cost per gram 122

Comparing cost per gram 123

Considering the cultivator's clientele 123

Chapter 8: Analyzing Market Trends: Technical Analysis 125

Comparing Technical and Fundamental Analysis 126

Grasping the principles of technical analysis 126

Weighing the pros and cons of technical analysis 128

Combining the best of both worlds 129

Gathering your tools 130

Spotting and Monitoring Trends 131

Examining different trends 131

Gauging a trend's length 134

Following trendlines 134

Looking for resistance and support 135

Referencing Technical Charts 136

Getting to know the different chart types 136

Identifying chart patterns 138

Interpreting Technical Indicators 143

The Relative Strength Index 143

The Money Flow Index 144

Moving averages 144

Moving average convergence divergence 144

Bollinger Bands 145

Part 3: Buying and Selling Cannabis Stocks, ETFs, or Mutual Funds 147

Chapter 9: Choosing a Broker or Advisor 149

Defining the Broker's Role 150

Distinguishing between Full-Service and Discount Brokers 150

At your disposal: Full-service brokers 151

Just the basics: Discount brokers 153

Deciding Whether to Fly Solo or Consult a Broker or Advisor 154

Finding a Cannabis-Savvy Broker or Advisor 155

Evaluating Brokers and Advisors 155

Comparing costs 156

Comparing quality and service 156

Checking credentials 157

Comparing online brokers 158

Chapter 10: Using Screening Tools 161

Searching the Marijuana Stock Universe 162

Getting Up to Speed on the Different Exchanges and Markets 165

Browsing through the Daily Marijuana Observer's List

of OTC Cannabis Stocks 167

Checking Out Other Stock Screeners 168

Screening Cannabis Investment Funds 170

What to Screen for 172

First up: The major categories 172

The main event: Specific filters 173

Valuation measures 175

Financial Highlights 176

A Few Final Points to Keep in Mind 176

Chapter 11: Placing Buy and Sell Orders for Cannabis Stocks and ETFs 177

Understanding the Bid-Ask Spread 178

Placing an Order to Buy or Sell Shares 179

Choosing an Action 182

Buy 182

Sell 182

Sell all shares 182

Understanding the Different Order Types 183

Market orders 184

Limit orders 184

Stop orders 185

Trailing stop orders 186

Specifying a Timeframe 187

Day 187

Good till canceled 188

Fill or kill 188

Immediate or cancel 188

Market on open 189

Market on close 189

Chapter 12: Exploring Advanced Trading Techniques 191

Buying on Margin 191

Registering to buy on margin 192

Examining marginal outcomes 193

Striving for success on margin 194

Shorting a Stock 195

Setting up a short sale 196

Taking a hit when the stock price keeps rising 197

Responding when you feel the squeeze 198

Recognizing the ups and downs of shorting cannabis stocks 198

Part 4: Exploring Cannabis Investment Strategies 201

Chapter 13: Following the Money: Momentum Investing (aka Speculating) 203

Spotting Opportunities to Buy: Upward Momentum 204

Watching for Signals to Sell: Downward Momentum 207

Following the Smart Money 208

Avoiding Some of the Risks Inherent in Momentum Investing 209

Watching out for the short squeeze 209

Steering clear of pump-and-dump scams 210

Avoiding cannabis stock and industry bubbles 211

Knowing when momentum investing works and when it doesn't 211

Chapter 14: Investing in Canadian Cannabis Companies 213

Deciding Whether to Invest in Canadian or U.S Cannabis Businesses 214

The pros and cons of the Canadian cannabis market 214

The pros and cons of the U.S cannabis market 216

Scoping Out the Four Leading Canadian Cannabis Companies 217

Canopy Growth Corporation 217

Cronos Group 218