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As the legalization or decriminalization of marijuana continues to spread and states make moves to change policy, the notion of cannabis stocks is swelling as well. There is no question the industry is growing at a rapid rate, and many investors are looking to get in on the action, at least when it comes to the financial side.

According to CNBC, cannabis stocks experienced double-digit gains in 2014 on the Viridian Cannabis Stock Index, which is comprised of 75 publicly traded companies. Overall, the index grew 38.4 percent in 2014. Investors who have been on the fence before are now warming to the idea of cannabis stocks as an intelligent financial investment. Further, the ArcView Group, which is a cannabis industry investment and research firm, predicts the growth of the marijuana industry to expand even further this year, climbing 33 percent over 2014’s high numbers.

A jump of this size would make the marijuana industry a $3.5 billion sector, as opposed to the $2.7 billion industry it became in 2014.

New Cannabis Companies
Just as the legalization of marijuana in certain states has brought with it a plethora of consumers, it also has spurred new businesses into action. According to Consumer Reports, new cannabis companies continue to spring up. Further, investors can now purchase shares in these companies, and following the most recent decriminalization in Colorado and Washington, these shares have been on a sharp increase.

According to The Wall Street Journal, these cannabis stocks have largely taken the form of over-the-counter or penny stocks and special funds for accredited or high-net-worth investors. And while many investors are new to the game, there have been some at it for years already.

Concerns As Well
Even though the popularity is evident and cannabis stocks are continuing to do nothing but increase, there are some investors who are still concerned about trading in marijuana-based commodities. It is true that certain states have legalized marijuana and even more have put in measures to decriminalize the product. However, it is still an illegal substance according to federal law. While there has been no action taken by the national authority, the concern is very present.

For example, the Securities and Exchange Commission issued an investor alert in May 2014 regarding cannabis stocks and noted, “Marijuana related companies may be at risk of federal, and perhaps state, criminal prosecution.” In this report, the SEC cited trading halts on several cannabis-related organizations due to suspicious trading activity or investor complaints.

However, as states keep the legalizing trend growing, investors are paying very close attention.

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