Cannabis investors don't enjoy the same amount of stability as other investors focused on other sectors, but there can be benefits to investing in the burgeoning industry.
How does cannabis investing differ from other sectors?
In our Ask the Expert series, Christian Magoon, Amplify ETF CEO, may just have the answer.
Magoon spoke to TheStreet about his company's newest exchange traded fund, Amplify Seymour Cannabis ETF (CNBS) , which is curated by CNBC contributor Tim Seymour.
"When an investor is considering investing in cannabis, there's some different factors to be aware of. First, the legality of the company, they're investing in. Not every publicly listed and traded company in the U.S. or Canada is operating legally," Magoon said.
The next thing investors should look out for is just how diversified the company's revenue stream is. Magoon says his ETF only considers stocks that have 50% or more of their revenue from cannabis and hemp.
While too much diversity in revenue is a red flag for Magoon and his ETF, that isn't necessarily the case when it comes to how to invest in the space.
"There's a lot of volatility in this space. Betting on one or two names isn't superior to owning a basket of professionally selected cannabis companies," Magoon said.
Check out the video above to see what else Magoon had to say.
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