Germany’s watchdog BaFin has published a statement warning of the activities of “Cannabis Trader”, a company that appears to be offering marijuana derivatives products without complying with its financial legislation.
In a short description of the company’s activities, the financial regulator noted that Cannabis Trader offers German customers CFDs that allegedly give them exposure to a handful of companies operating in the growing sphere of the cannabis industry.
BaFin, the federal financial watchdog in Germany, also indicated that Cannabis Trader displays address details on its website which are non-existence and that its domain is registered anonymously. The firm evidently does not possess any regulatory status at any jurisdiction.
Demand for Cannabis Stocks Heats Up
Over the past couple of months, marijuana stocks represented a lucrative opportunity for investors, and thus retail brokers have stepped in to cater to this demand. Being excited about a new asset class is nothing to be ashamed of, but investors, who just got badly burned by the cryptocurrency boom, should be so careful when investing into another asset that seems a good candidate for the next bubble.
After years of challenging access to capital, 2018 has seen a remarkable improvement for US cannabis operators. The marijuana companies themselves have been busy expanding their capacity, diversifying their product lines, and making acquisitions, all in an effort to improve differentiation from their peers and bolster their long-term growth and profit outlook.
This came in the context of more countries voting in favor of marijuana use legalization. Therefore investors’ interest definitely would make sense.
But even the ‘real’ cannabis industry – sometimes referred to as the Wild West of investing – is littered with high-flyers, potentially over-valued companies, and scams.