Despite $700 million in marijuana sales last year alone, Colorado officials are warning investors to think twice before putting their money into cannabis companies.
The reason: There’s a relatively high risk of getting sucked into a scam.
The Colorado Division of Securities has put out an alert that cautions investors against betting capital on a trio of investments it considers risky: marijuana-related companies, binary options and digital currency.
The warning comes at a time when a string of marijuana-related companies have announced significant capital raises, often in the seven-figure range.
In terms of public companies, marijuana-related stocks are listed on the thinly traded over-the-counter market, where financial reporting requirements are minimal. That makes it difficult for investors to determine the true health of a business – and in some cases even figure out what the company does.