How to invest in medical marijuana stocks

Innovative Industrial Properties Inc. Though it was a poor year for pot stocks, plenty of cannabis history was still made. My favorite among the ancillary providers to the marijuana industry is Scotts Miracle-Gro. Warrants give investors an option to buy shares in the future.

North America’s Next Canna-Boom Puts Extract Companies Center Stage!

The legal marijuana industry is the fastest growing industry in the world and investors are frequently trying to learn how to invest in marijuana stocks. Over the last two years, the industry has exploded and now medical cannabis mariujana legal in Australia, Germany, Canada, Uruguay, Colombia, and the Netherlands. The rapid growth of the legal marijuana industry has led to a surge in the number of opportunities and only here, can you access the best information and learn mraijuana to invest in marijuana stocks and capitalize on this incredible industry. The legal marijuana industry offers immense upside stocis investors still need to be selective with their investments. This new growth industry is exciting but investors need to educate themselves and learn how to invest in marijuana stocks before doing so.

Here are seven straightforward steps to help you invest in high-growth — but high-risk — marijuana stocks.

The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis only recently has begun to gain wider acceptance, and has been legalized in various regions for recreational, medicinal and other uses. The biggest companies include Canopy Growth Corp. CGC , Tilray Inc. ACB , but the industry has scores of upstarts that are trying to grab a piece of the market. MJ posted a month trailing total return of

How to Invest in Marijuana Stocks

If you’re nervous there could be a crackdown on recreational marijuana companies because marijuana remains illegal in the U. Most countries still prohibit recreational marijuana use, but laws allowing medical marijuana use are becoming increasingly common.

For example, medical marijuana markets are thriving in Canada and Germany, and in the U. Medical marijuana may not be as big an opportunity as recreational marijuana, but it could still be worth tens of billions of dollars annually to the top stocks. Here’s how investors can profit from marijuana as medicine. Marijuana’s use as medicine isn’t new. Its documented history of medical use in Western countries is more recent, but a study of fossil pollen conducted by the University of Vermont suggests cannabis was cultivated in Europe as early as B.

Cannabis may have been cultivated for industrial purposes, such as for use in making rope, but migration and trade routes could also have spread word of its medicinal properties to Europe. In modern times, medical marijuana’s use in the West how to invest in medical marijuana stocks credited mainly to England’s colonization of India.

It was there that doctor William Brooke O’Shaughnessy studied cannabis as a treatment for muscle spasms, stomach cramps, and general pain. The two most common of the more than cannabinoids found in marijuana are tetrahydrocannabinol THC and cannabidiol CBD.

Marijuana’s been prohibited in the U. California’s medical marijuana market really took off, however, following the passage of Senate Bill in That bill created an ID card system for patients and allowed nonprofit collectives to operate as marijuana dispensaries. Since California’s pioneering decision in the late s, more than half of U.

Voters in Washington, Oregon, Alaska, and Nevada legalized medical marijuana inand today, 33 states have passed comprehensive medical marijuana laws, and an additional 13 states have passed laws allowing the use of CBD products. As of this writing, only four states don’t have medical marijuana laws of any kind. The use of medical marijuana isn’t limited to the United States.

In fact, some countries, including Canada and Germany, have passed laws creating national medical marijuana marketplaces. Canada’s medical marijuana market has experienced considerable growth since rules were put in place in to license patients, growers, and dispensaries.

Medical marijuana sales there now total in the hundreds of millions of dollars per year. Germany is currently importing medical-grade cannabis from Canada and the Netherlands, but its plans include licensing companies to cultivate cannabis domestically in Germany in Unlike mutual funds, which are priced once per day at the market closing price, an ETF can be bought or sold at any point during the trading day.

You decide how much to invest in an ETF, but because they trade like stocks, you’re likely to be charged a commission each time you make an investment. Additionally, since ETFs have significant operations behind the scenes that enable the pooling and investing of money from many people in many companies, they charge annual fees, like a mutual fund, and those fees can drag down returns.

Investors interested in owning individual marijuana stocks operating in the U. Because marijuana use is illegal in the U. Over-the-counter stocks don’t have to meet strict listing requirements, so companies that trade on this market can expose investors to a higher risk of fraud. Additionally, stock price quotes can vary significantly for OTC stocks because there is no central exchange and liquidity is questionable, which can make it tough to buy or sell at favorable prices.

The situation is different in Canada. Because it’s legal nationally, medical cannabis companies can list on the major Canadian exchanges, including the Toronto Stock Exchange. However, foreign stocks have their own drawbacks. There are usually higher trading commissions and fees, and investors must accept risks associated with converting U.

Depending on the stock, liquidity can be an issue for foreign stocks. Those companies have exposure to medical marijuana through their Canadian operations, but beyond shipments for medical research, they’re currently barred from operating in the U. Before a discussion of individual medical marijuana stocks worth buying, here are the different types of medical marijuana stocks. These companies cultivate cannabis in fields, greenhouses, or indoor facilities. Fields produce cannabis at the lowest cost, but greenhouses and indoor facilities provide growers with more control over environmental factors, such as weather, pests, and nutrients that reduce waste and boost consistency — important factors for cultivating medical-grade cannabis.

Once cannabis is harvested, it’s often processed using solvents to extract chemical cannabinoids to make oils and concentrates for use in other products, including beverages. Most medical marijuana growers also operate extraction facilities because these processed products can command higher prices and offer better profit margins.

Cannabis has a long history of medical use, but prohibition has made it difficult to conduct scientifically controlled trials in humans to determine whether such use is effective and safe. That’s changing. Increasingly, companies are investing money in research to develop strains to study in trials with the goal of securing regulatory approval that sidesteps federal prohibition.

After marijuana products are packaged, they need to travel through the supply chain to retail operators for sale to consumers.

Medical marijuana growers can operate vertically, controlling all aspects from cultivation through retail sale, or they can contract with distribution companies that help them market their products to medical marijuana dispensaries. Each of them generates meaningful medical marijuana revenue in Canada and Germany, and they’re both establishing footprints in other markets, including Australia. To maintain its leadership position in medical marijuana, the company was among the first growers to plan scientifically controlled clinical trials to prove cannabis’ efficacy as a healthcare treatment.

Additionally, it has 39 U. For instance, that subsidiary received approval to evaluate marijuana as a treatment for anxiety in certain animals in Almost all of Canopy Growth’s sales have come from medical marijuana in the past, but medical marijuana sales as a percentage of revenue are likely to fall as Canada’s recreational marketplace matures. The situation is similar at Aurora Cannabis.

Those acquisitions also bulked up Aurora Cannabis’ pipeline of clinical-stage cannabis trials. It’s completed or in the progress of completing 40 clinical trials or case studies, plus it has seven preclinical trials underway entering The various indications it’s targeting include pain, cancer, epilepsy, PTSD, anxiety, opioid use, and neurodegenerative diseases. Like Canopy Growth, Aurora Cannabis will be a big participant in Canada’s adult-use recreational market, but medical marijuana will remain an important contributor to this company’s future, making it and Canopy Growth the top two growers every medical marijuana investor ought to consider.

Although the U. Drug Enforcement Agency is making it easier for Canadian makers to ship their medical marijuana extracts to the U.

As a result, investors interested in exposure to the U. Historically, medical marijuana research in the U. Epidiolex has been approved only for use in Dravet syndrome and Lennox-Gastaut syndrome, two rare types of epilepsy, but it could become standard care in those indications. There are an estimated 30, to 35, patients in the U.

GW Pharmaceuticals’ opportunity might not be limited to Epidiolex. It’s also evaluating marijuana cannabinoids in other indications, including schizophrenia and autism. If cannabis can safely address those indications, it could represent billions of dollars in revenue opportunity for the company.

The top marijuana growers, including Aurora Cannabis and Canopy Growth, are opening stores and partnering with retailers in Canada, but if you’re interested in medical marijuana retailers in the U. One of the exceptions is Medmen, a store marijuana company that became publicly traded on the OTC market in Medmen has big expansion plans. The company has an agreement in place to buy a rival, PharmaCann, and once it has done that, it will have licenses allowing it to operate up to 76 stores in 12 states.

The deal also increases Medmen’s store count to Green Thumb is another option for investors. It operates 13 dispensaries under the RISE brand in eight states, and it has licenses to open as many as 72 retail locations in nine U. Its focus on heavily regulated markets that limit licenses could mean less competition, higher margin, and greater market share than other retailers. If you’re interested in companies likely to prosper from sales to fast-growing marijuana companies, suppliers could be a perfect investment alternative.

Because these companies work with many cannabis companies, they’re somewhat insulated against the risk of a single cannabis company going bankrupt. The largest marijuana company supplier is Hawthorne, a supplier of greenhouse solutions, including hydroponics, owned by Scotts Miracle-Gro. Hawthorne has been acquiring smaller suppliers over the past few years to build up its product line and create more cross-selling opportunities.

Although Hawthorne is a major supplier likely to benefit from growing demand as more states legalize marijuana, it is exposed significantly to growers, and that means sales may fluctuate widely because of underlying commodity prices for marijuana dried flower. Last year, overproduction in maturing markets, including Colorado, Washington, and Oregon, caused marijuana commodity prices to tumble, reducing demand and thus sales at Hawthorne.

Nevertheless, Hawthorne has established itself as a leader in hydroponics, nutrients, and other solutions used by growers, and its scale and distribution experience suggest it will be a beneficiary of the long-term trend of rising sales because of legalization.

KushCo Holdings operates in a different market from Hawthorne, focusing primarily on packaging solutions, including bottles, tins, and vapes. Additionally, it acquired a brand marketing company last year, and it sells solvents and other solutions necessary for extracting marijuana’s chemical cannabinoids. The company supplies over 5, cannabis companies, and future growth could come from new recreational marijuana dispensaries in California, on the East Coast, and in Canada.

That’s important because California is the largest legal recreational marijuana market in terms of both population and sales. The medical marijuana market is more mature than the recreational, adult-use market, but that doesn’t mean that investing in medical marijuana stocks is risk-free.

Most of these companies have limited operating histories, and their growth prospects depend on marijuana prohibition’s remaining out of favor. If pot prohibition regains momentum, the value of these stocks could fall, unless they’re able to pivot and secure FDA approval that sidesteps enforcement actions.

There’s also no guarantee that future trials conducted by medical marijuana companies will prove that marijuana is as safe and effective as it’s currently believed to be. We’ve already seen some evidence of this risk. InGW Pharmaceuticals trials evaluating a THC-based medication in cancer pain patients failed to outperform a placebo. Overall, legal marijuana markets are in their infancy, and countless companies are angling to capture a share of this massive market.

Many of them, however, will fail, and that makes investing in marijuana stocks dangerous. There’s a real chance of losing a significant amount of money if you’re not careful, so it’s critical to do your homework and understand these businesses before buying. Furthermore, spending on medical marijuana could skyrocket in the coming years because marijuana companies are investing considerably to conduct scientific trials validating the use of their strains in various high-impact indications.

If these trials allow companies to differentiate their marijuana from competitors’ marijuana, it could provide a lot of margin-friendly pricing power that winds up rewarding investors in the coming decades. Updated: Aug 6, at PM. Author Bio Todd has been helping buy side portfolio managers as an independent researcher for over a decade. InTodd founded E. Capital Markets, LLC, a research firm providing action oriented ideas to professional investors. Follow ebcapital.

4 Ways to Safely and Properly Invest in Medical Marijuana

VFF, VGW.V, and VFF were top for value, growth, and momentum, respectively

The link below provides a quick spin through what we’ve seen so far, from decriminalization efforts starting in to legalization efforts beginning in earnest in to the political signs of where we seem to be heading. The three primary types of pot stocks are:. Department mediccal Justice could clamp down at any time. OTC stocks don’t have to meet these requirements. IIPR CGCTilray Inc.