Beware Marijuana Investment Scams

Better Investing

What's Hot

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

Do This or Your iPhone Bill May SkyrocketSave

11 Places in the World Where You Can Afford to Retire in StyleMore

19 Moves That Will Help You Retire Early and in StyleFamily

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

50 Ways to Make a Fast $50 (or Lots More)Grow

32 of the Highest-Paid American SpeakersMake

The 35 Two-Year Colleges That Produce the Highest EarnersCollege

5 DIY Ways to Make Your Car Smell GreatCars

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

7 Household Hacks That Save You CashAround The House

5 Reasons a Roth IRA Should Be Part of Your Retirement PlanGrow

30 Awesome Things to Do in RetirementCollege

Beware These 10 Retail Sales Tricks That Get You to Spend MoreMore

Legal use of marijuana for medical or recreational purposes is becoming more common, but that doesn't mean it's an amazing investment opportunity.

Scammers are preying on a budding industry: marijuana.

Because medical marijuana is now legal in nearly 20 states and recreational use of pot is legal in two, it’s getting increased attention, the Financial Industry Regulatory Authority says. And anywhere there’s buzz, there are scams.

In fact, a lot of the buzz may come from scammers blowing smoke. FINRA warns of a company advertising online through sponsored links, investment profiles and spam email that claimed its marijuana stock “could double its price SOON.” Except, FINRA says, “the company’s balance sheet showed only losses, and the company stated elsewhere that it was only beginning to formulate a business plan.”

Marijuana stock scams can be promoted in lots of ways, including webinars, infomercials and blogs, FINRA says. They pitch investments in shares of small, thinly traded companies with virtually no history, then sell off the shares when they’ve peaked. Investors are then stranded with worthless stock in what’s being called a “pump and dump” scheme.

FINRA has a webpage on how to weed out the scams. Here are some of its main points:

  • Ask why you’re so special. There’s no reason for a stranger to hand you a great investment opportunity. Most likely, these people are paid promoters of the company they’re pitching.
  • Consider the source. Are they putting out lots of press releases or promotions over a short period? Is there any mention of risk? Have they recently changed their name or focus?
  • Do your homework. Hopefully you wouldn’t invest in anything without doing solid research, but it’s especially important in a new market. Look up the corporate officials and major stakeholders, then check for indictments, convictions, lawsuits, investigations and complaints.

If you’re new to investing, there are better places to start. Check out the video below for some basic advice.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Sam’s Club Reveals Details of Black Friday, 5 Other Holiday Sales

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,720 more deals!