When President Biden last week pardoned everyone convicted of marijuana possession under federal law and said his administration would review whether marijuana would remain a Schedule 1 drug, it revived the conversation about federal legalization of cannabis.

For retail shareholders, it also opened up a conversation about investing in companies that work in the marijuana industry. When it comes to investing in cannabis, there’s almost as much confusion as there is potential. The value of the worldwide legal cannabis market is projected to increase by a compound annual growth rate of 26.3% and to reach $91.5 billion by 2028, according to Grand View Market Research.

Still, many individual investors are confused about the legality of investing in marijuana and where to begin. For the most part, investing in marijuana is the same as trading in any other asset. Investing in anything involves some degree of risk. Investing in marijuana has a few more specific risks that retail investors should understand.

First, marijuana remains illegal at the federal level in the U.S. and because of that, federal law places severe restrictions on banks that serve marijuana-related companies. That makes it difficult for marijuana-related business to access financial services, though support continues to grow for streamlining the banking process.

As a retail shareholder, it is not illegal to invest in companies that work in the industry, but the companies themselves may be criminally prosecuted if they run afoul of federal law. And that can impact the value of your investment. As with any hot industry, investors must also watch for scams, especially if the investment trades on OTC markets, which are not required to regularly file financial statements. Supply and demand can also affect the cannabis market, especially as it grows and companies balance heavy early demand with longer-term consumption levels.

The medical use of cannabis has been legalized in 39 states and the District of Columbia. The recreational or adult-use of cannabis is also legal in DC and 19 states. Recreational marijuana is also legal in Canada, Georgia, Malta, Mexico, South Africa, and Uruguay. Still, it is a young industry and many of the companies that work in it are generally unprofitable, though fast growing – not the best formula for investors who cannot tolerate high levels of risk.

Investing in marijuana falls into three categories of companies: Marijuana-focused biotech companies, growers and retailers and ancillary product and service providers.

A number of medical and pharmaceutical companies have shifted their attention to cannabinoid-based medicines for the treatment of a variety of conditions and there several examples of cannabis biotech companies, including Jazz Pharmaceuticals (Tii:JAZZ), Cara Therapeutics (Tii:CARA) and Corbus Pharmaceuticals Holdings (Tii:CRBP).

Examples of publicly traded growers and retailers include Tilray Brands (Tii:TLRY), Aurora Cannabis (Tii:ACB) and Canopy Growth (Tii:CGC). They are involved in the production and sales of cannabis products. Ancillary product and service providers include companies like: Chicago Atlantic Real Estate (Tii:REFI), a mortgage REIT that specializes in cannabis operations; AFC Gamma (Tii:AFCG), a provider of institutional loans to cannabis operators nationwide; and ScottsMiracle-Gro (Tii:SMG), which supports the marijuana industry through its fertilizer and soilless indoor gardening equipment.

Investing in marijuana is not for the retail investor who cannot tolerate high risk or afford to wait until marijuana is legalized across the country – if it ever is. Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (Tii:MJ), have vastly underperformed the broader market. MJ has provided a total return of -66% over the past 12 months, well below the Russell 100 Index’s total return of -15.2%.

Although no marijuana companies currently offer shareholder perks, retail investors are rewarded on TiiCKER simply for owning stock in companies they love.