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Delta-9 tetrahydrocannabinol
(THC) is the primary psychoactive ingredient in marijuana. Cannabidiol (CBD) is
another important cannabinoid that has been found to possess therapeutic
benefits.
These two ingredients have been at the forefront of a battle over marijuana. The
United States, along with many other countries around the world, prohibit the
use of marijuana at the federal level, primarily because of the mind-altering
effects and potentially addictive attributes of THC. However, the potential
therapeutic benefits of CBD have led 30 U.S. states and countries, including
Canada and Germany, to legalize medical marijuana. In addition, nine U.S.
states and the District of Columbia also now allow the legal recreational use of
marijuana. Canada's recreational cannabis market is scheduled to open on Oct.
17, 2018.
Although marijuana legalization is still somewhat controversial, public support
for legalization in the U.S. and other countries has continued to increase. For
example, a recent survey from the Center for American Progress, a progressive
public policy research and advocacy group, found that 68% of Americans
support legalizing marijuana -- a record high level of support. Forty percent of
respondents strongly support legalization of the drug.
The spread of marijuana legalization has created a blossoming industry.
Businesses have popped up to service every part of the growing industry, from
cultivating and growing cannabis (or providing services to the growers), to
distribution and retail marketing, and even to biotech development of
cannabinoid-based prescription drugs.
You've no doubt seen firsthand the impressive growth in public support
for marijuana, as evidenced by the growing number of states that have
legalized the drug for medical or recreational purposes. You've probably
heard about the enormous gains marijuana stocks have generated over
the past couple of years. You might also be aware of predictions about
how large the marijuana industry could become, including a recent
projection that the U.S. marijuana market could reach $22 billion by 2022.
If all of these developments have you contemplating the idea of investing
in marijuana stocks, you're not alone. Increasing numbers of investors have
bought shares of marijuana stocks in anticipation of making huge returns.
But should you invest in marijuana stocks? Here's what you need to know
to make an informed decision.
Many companies in the cannabis industry have opted to "go public,"
making their shares available for purchase on public stock markets, to
raise cash to fuel additional growth. This growth potential is the most
compelling reason to consider investing in marijuana stocks.
Canada's vote to legalize recreational marijuana has lent significant
investor attention to Canadian marijuana stocks. Arcview Market Research
and BDS Analytics project that Canadian marijuana sales will jump from
around $600 million last year to $5.4 billion by 2022. That's a compound
annual growth rate of more than 55%.
Germany legalized medical marijuana in 2017. The country's cannabis
market could approach $1.6 billion by 2022, according to Arcview and BDS
Analytics, up from only around $9 million last year. This projected growth
makes Germany not only the biggest international marijuana market
outside of North America but also the fastest-growing marijuana market in
the world. But the biggest prize of all is still the United States. Even with
the rapid expansion of marijuana markets in Canada, Germany, and
elsewhere, the U.S. still is likely to account for close to three-quarters of
total cannabis revenue four years from now.
Overall, there is a possibility that the global marijuana market will more
than triple from 2018 to the end of 2022. There will probably be several big
winners from this sizzling growth. Investors who accurately pick those
winners should be set for some fantastic returns over the next few years.
This is an industry that has a lot of expectations as we speak and When this industry
is fully ramped up -- mind you, this will take a few years -- it's expected to generate
upwards of $5 billion in added annual sales. This comes atop what growers were
already bringing in via medical weed sales and exports to foreign countries. This longawaited
legalization is what's been responsible for sending pot stocks through the
roof for years.
Since the beginning of 2016, nearly all marijuana stocks are substantially higher, with
some even sporting four-digit percentage gains through this past weekend. The
following five marijuana stocks, listed in ascending order, are hands-down the
industry's top performers in that time span.
But before we jump right in, please note that because some of these companies have
uplisted to more reputable exchanges, prior over-the-counter-listed historical data
may not be available. In such instances, share-price change data on the Canadian
exchanges may be used, and will be noted below
.
1. Namaste Technologies: Up 6,750%
However, more than doubling up the second-best performer since the beginning of
2016 is small-cap Namaste Technologies (NASDAQOTH:NXTTF). Having finished 2015
at just $0.02 per share, Namaste has since gained a brisk 6,750% as its telemedicine
app and vaporizer business has grown in size. Without question, the most exciting
aspect of Namaste Technologies is its online portal NamasteMD, which was launched
earlier this year. Since its launch, NamasteMD has already attracted more than 17,000
patients. Most important, these patients can be kept within the Namaste universe
thanks to its wholly owned grow farm CannMart. Being able to lean on its highmargin telemedicine app and
internalize its growing costs may result in aboveaverage margins and certainly a unique business model.
Investors are likely also pleased with Namaste's international presence. Its ecommerce platform has over
30 websites in more than 20 countries, diversifying its
revenue stream. For example, it saw 364% sales growth in Canada during the fourth
quarter, but also 261% sales growth in Germany and 188% in Brazil.
2. Cronos Group: Up 3,313% (on the Canadian exchange)
Among the big boys, no marijuana stock has performed better than Cronos
Group(NASDAQ:CRON), which, according to its Canadian-listed shares, are up better
than 3,300% since the beginning of 2016.
Cronos Group has likely found support from investors, given that it's on track to be a
top-10 producer, once running on all cylinders. In July, the company announced a
joint venture with a number of investors to create Cronos GrowCo. When fully up and
running, this joint venture will span 850,000 square feet and yield about 70,000
kilograms a year. Combined with its existing grow facilities and brands, Cronos
should be capable of approximately 140,000 kilograms of peak annual output.
Cronos Group also turned heads in early September when it announced a
partnership with privately held Gingko Bioworks. The duo will work to extract
cannabinoids from the cannabis plant and produce these cannabinoids on a
commercial scale. In other words, Cronos Group is moving beyond just dried flower,
which is a high-margin (and smart) move.
Given Cronos' late start to its joint venture greenhouse expansion, it's possible the
company could miss out on some lucrative long-term supply deals. Then again,
shareholders over the past 34 months aren't complaining.
Although recurring profits are still elusive, and may remain so for some time as
Namaste builds out its core infrastructure, long-term investors are sitting pretty.
3. MariMed: Up 3,093%
Perhaps one of the more surprising names you'll find on this list is Massachusettsbased cannabis
consulting and grow-facility operator MariMed
(NASDAQOTH:MRMD). It's come a long way from its $0.15 share price at the end of
2015, and now sits nearly 3,100% higher. Unlike Aurora Cannabis and Canopy Growth,
which both trade on the iconic NYSE, MariMed shares are listed on the over-thecounter (OTC) exchange.
Though the OTC exchange has made strides to improve
reporting standards in recent years, volume and institutional interest still tend to be
considerably lower. This lack of volume has made MariMed exceptionally volatile over
the years and, in recent months, may be at least partially responsible for its surging
share price.
Tangibly speaking, investors should be pleased with MariMed's recent acquisitions
and investments. Last month, it closed on its acquisition of BSC Group in New Jersey,
potentially setting itself up for licensing and consulting market share if New Jersey
legalizes recreational pot. MariMed also announced an investment in customer
relationship management and marketing software company Sprout.
Again, this is a very thinly traded, money-losing pot stock. But for the time being,
being under the radar is probably what's pushing its market value higher.
4. Canopy Growth Corp.: Up 2,602% (on the Canadian exchange)
Speaking of showing up for investors, Canopy Growth Corp.
(NYSE:CGC) has kicked
butt and taken names since the beginning of 2016. The first Canadian marijuana
stock to list on the NYSE has seen its shares rise by a brisk 2,602% in roughly 34
months, according to its Canadian-listed shares. Canopy Growth is probably going to
slide in behind Aurora Cannabis as the nation's second-largest producer. It has 5.6
million square feet of capacity -- 2.7 million of which is already licensed for cultivation
by Health Canada -- which should give it roughly 500,000 kilograms of annual yield
when fully ramped up.
What allows Canopy to really stand out are its sales channels, brands, and
partnerships, which are light-years ahead of Aurora Cannabis. Canopy Growth's
Tweed brand is arguably the most recognizable throughout Canada,
and Constellation Brands' $4 billion investment in Canopy Growth Corp. gives it a 37%
stake in the company. More than just a partnership, the maker of Modelo and Corona
beer has a vested interest in Canopy's long-term success. All told, it's not surprising to
see this company performing as well as it is.
5. Aurora Cannabis: Up 1,571%
Although it's a company I might rail on for its acquisition binges and subsequent
ballooning of its outstanding share count, grower Aurora Cannabis (NYSE:ACB) has
done well for itself and shareholders with a 1,571% gain since 2016 began.
Aurora Cannabis, which recently uplisted to the New York Stock Exchange (NYSE),
looks to have the inside track to the peak production crown. Already on pace for
more than 570,000 kilograms of annual production, the company's acquisition of
ICC Labs in South America will bring 92,000 square feet of existing production and 1.1
million square feet of developing production under its wing. In short, 600,000-plus
kilograms seems very reasonable when operating on all cylinders.
With production figures this large, investors are confident that Aurora will be able to
take advantage of economies of scale, thereby producing cannabis at a very low cost.
They likely also believe Aurora has what it takes to forge partnerships and land
lucrative long-term supply deals given its top-tier production.
There are still a lot of questions left to be answered with Aurora, but there's little
denying that it's showed up for shareholders so far.
We are committed to making investors addicted with our systems. the crux
of the program is to keep investors coming back for more and we can only
do that by satisfying them impeccably.
We have an extensive experience with finance and its dynamics and we
have come with pot stocks to better satisfy our clients. There are several
reasons to work with us and they include:
