Cannabis Seed Companies Stock

Should you put your hard-earned money into marijuana stocks? We detail the investment opportunities, risks, and regulations in the cannabis space. These are the marijuana stocks with the best value, fastest growth, and best performance for August 2022. Demand for legal cannabis products is driving big earnings for cannabis companies. Is it the right time to invest in weed stocks?

Investing in Marijuana Stocks

The marijuana industry is expected to expand at a compound annual growth rate of at least 25% through 2030, and many investors are seeking to profit. As states and entire countries decriminalize or legalize cannabis and/or its components, there are growing opportunities for entrepreneurs and existing companies.

But, as in any nascent industry, there are also plenty of investment risks. Whether you’re a first-time investor or a seasoned veteran, it pays to understand how this industry works. This guide will get you up to speed quickly and includes our picks for the top marijuana stocks.

Best marijuana stocks to buy in 2022

Company Description
Green Thumb Industries (OTC:GTBIF) Marijuana grower and retailer
Cresco Labs (OTC:CRLBF) Marijuana grower and retailer
Innovative Industrial Properties (NYSE:IIPR) Ancillary provider
GrowGeneration (NASDAQ:GRWG) Ancillary provider
Scotts Miracle-Gro (NYSE:SMG) Ancillary provider
Jazz Pharmaceuticals (NASDAQ:JAZZ) Biotech company

1. Green Thumb Industries

Green Thumb Industries ranks as one of the largest U.S. multistate cannabis operators. It owns 77 retail cannabis stores in 15 states across the U.S. and operates 17 manufacturing facilities. Green Thumb holds licenses to roughly twice as many retail locations.

The company has been profitable since 2020. It also continues to deliver revenue and earnings growth and maintains a strong balance sheet even with macroeconomic headwinds. Green Thumb should have plenty of growth potential over the long term as the U.S. cannabis market expands.

2. Cresco Labs

Cresco Labs, like Green Thumb, is based in Illinois. It operates retail cannabis stores in 10 states, including six of the 10 most heavily populated states in the U.S. Cresco is the top wholesaler of branded cannabis products in the U.S.

The company is growing rapidly through acquisitions and opening new retail locations. Cresco’s pending acquisition of Columbia Care (OTC:CCHWF) will make it the largest multistate operator based on revenue. The acquisition is moving forward, with overwhelming approval by Columbia Care shareholders and a thumbs-up from the Supreme Court of British Columbia. Once the deal closes, Cresco will operate in 18 U.S. markets, including 12 states with annual cannabis sales of more than $1 billion.

3. Innovative Industrial Properties

U.S. cannabis companies can’t easily secure capital from banks or financial institutions since marijuana remains illegal at the federal level. Innovative Industrial Properties (IIP) helps to solve the cash shortage for growing marijuana companies. It buys properties owned by U.S. medical cannabis operators and leases the properties back to them. The property sale to IIP provides the cannabis operator with much-needed cash, and the lease agreements create a steady revenue stream for IIP.

Innovative Industrial Properties has grown significantly in recent years and now owns properties in 19 states. The company continues to generate strong revenue and earnings growth even with a recent default by one of its top tenants. Because Innovative Industrial Properties is organized as a real estate investment trust (REIT), IIP returns at least 90% of its taxable income to shareholders.

4. GrowGeneration

GrowGeneration is another ancillary provider and the largest specialty retail chain focused on the cannabis market. It operates 62 stores in 14 states and plans to add another three or four stores by the end of 2022.

Demand for the company’s hydroponics products has fallen due to an oversupply of cannabis in the U.S. This has caused short-term headwinds for GrowGeneration that are likely to continue throughout 2022 and possibly into 2023. However, the company’s long-term prospects remain bright. GrowGeneration should be in a position to significantly rebound when the market conditions improve.

5. ScottsMiracle-Gro

ScottsMiracle-Gro is facing the same market dynamics as GrowGeneration. The company’s Hawthorne Gardening subsidiary ranks as a leading supplier of hydroponic gardening products to the cannabis industry. Hawthorne should have a significant growth runway over the long term despite some near-term challenges.

Although Hawthorne Gardening has been a primary growth driver for Scotts, the company still generates the majority of its total revenue from consumer lawn and garden products. Higher commodity prices are currently squeezing margins for this business. However, the company’s consumer lawn and garden products provide a relatively steady counterbalance to its cannabis supply unit.

6. Jazz Pharmaceuticals

Ireland-based Jazz Pharmaceuticals acquired the cannabis-focused biotech company GW Pharmaceuticals in May 2021. GW’s drug Epidiolex is the first cannabis-based medicine to be approved by the U.S. Food and Drug Administration (FDA). Epidiolex, which treats two forms of childhood epilepsy and tuberous sclerosis complex, a rare disease where benign tumors grow on organs, has been a big commercial success, with sales of $658.3 million in 2021.

Jazz experienced a setback in June 2022 with cannabis candidate nabiximols failing to meet the primary endpoint of a late-stage study. The company continues to evaluate nabiximols in two other late-stage studies targeting multiple sclerosis-related spasticity. In addition to its cannabis products, Jazz markets sleep-disorder and cancer drugs.

A brief overview of the marijuana industry

Let’s cover some of the basics you need to know before investing in marijuana stocks.

  • The marijuana industry is divided into three broad categories: Marijuana growers and retailers cultivate and package cannabis products and sell them to consumers. Biotechnology companies develop and market cannabis-based pharmaceutical drugs. Ancillary marijuana businesses provide products and services to cannabis companies without touching the plant.
  • Cannabis can be medical or recreational:Medical cannabis patients use cannabis or cannabis extracts to treat health conditions and have recommendations or cannabis prescriptions from physicians. Recreational cannabis users purchase marijuana or cannabis extracts purely for enjoyment and must be 18 and older and living in a jurisdiction where recreational use of the plant is legal.
  • Geography matters: Medical cannabis is legal in many more countries than recreational cannabis. In the U.S., cannabis remains illegal at the federal level. However, a growing number of states have legalized medical and/or recreational cannabis. The rapid growth of the U.S. cannabis market is translating into impressive growth by U.S.-based cannabis companies, while marijuana companies in Canada — where the plant is already fully legal nationwide — are expanding more slowly. Canada is one of the global legal markets where supply is outpacing demand and leading to falling cannabis prices.

Impact of COVID-19 on marijuana stocks

The COVID-19 pandemic affected nearly every part of the global economy, including the cannabis industry. In many U.S. states, cannabis dispensaries were designated as essential businesses. Cannabis sales boomed in some states during the first few months of the coronavirus outbreak, driven in part by more time spent at home and increased anxiety. Marijuana growers and retailers benefited, as did ancillary providers selling gardening supplies and other products to these companies.

However, not all cannabis companies fared well in the pandemic. Recreational cannabis retailers in tourist destinations such as Las Vegas saw their customer traffic dwindle, causing some of these dispensaries to start focusing on home delivery. In the medical segment, people delayed doctor visits, causing new patient starts to drop. Biotech companies experienced logistical challenges that affected sales and research progress.

To a large extent, the worst appears to be over for the cannabis market with respect to COVID-19, but some effects are still being felt.

Related investing topics

Pharmaceutical stocks

This huge industry holds opportunities for long-term investors, but there are risks too.

Biotech stocks

These companies create drugs and treatments for some of the biggest medical problems of our time.

Healthcare stocks

Healthcare is a universal need. Companies in this broad-based sector can produce healthy returns.

Consumer Staples stocks

No matter what the economy, we always need these products.

Should you buy marijuana stocks?

Just because there’s a trendy new sector with lots of press and potential growth doesn’t mean you need to invest in it. If you buy broad-based index funds, you’re covered no matter which sectors of the stock market do well. Conservative investors who prefer lower risk are likely better off avoiding investing in marijuana stocks.

See also  Cannabis Sativa Seed Oil Para Que Sirve

Aggressive investors with high risk tolerances will probably find a lot to like about marijuana stocks. The cannabis industry is still in its early stages, and the market opportunities are enormous, especially as more U.S. states legalize cannabis. Investing in the stocks is a high-risk but potentially high-reward proposition.

Keith Speights has positions in Innovative Industrial Properties. The Motley Fool has positions in and recommends Cresco Labs Inc., Green Thumb Industries, GrowGeneration Corp, Innovative Industrial Properties, and Scotts Miracle-Gro. The Motley Fool has a disclosure policy.

Top Marijuana Stocks for August 2022

AYR.A.CX, CRON, and FFNT.CX are top for value, growth, and performance

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 has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investments needed to speed up revenue growth. 37 U.S. states now permit the use of marijuana in some form.

Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have vastly underperformed the broader market. MJ has provided a total return of -63.7% over the past 12 months, well below the Russell 1000 Index’s total return of -7.1%. These market performance numbers and all statistics in the tables below are as of Aug. 8, 2022.

Here are the top five marijuana stocks with the best value, the fastest growth, and the best performance.

Best Value Marijuana Stocks

These are the marijuana stocks with the lowest 12-month trailing price-to-sales (P/S) ratio. For companies in the early stages of development or industries suffering from major shocks, this can be substituted as a rough measure of a business’s value. A business with higher sales could eventually produce more profit when it achieves (or returns to) profitability. The P/S ratio shows how much you’re paying for the stock for each dollar of sales generated.

Best Value Marijuana Stocks
Price ($) Market Cap ($B) 12-Month Trailing P/S Ratio
Ayr Wellness Inc. (AYR.A.CX) CA$6.36 CA$0.4 0.8
GrowGeneration Corp. (GRWG) 5.50 0.3 0.9
Cresco Labs Inc. (CL.CX) CA$4.52 CA$1.3 1.2
Jushi Holdings Inc. (JUSH.CX) CA$2.63 CA$0.5 1.8
Aurora Cannabis Inc. (ACB) 1.65 0.5 1.9
  • Ayr Wellness Inc.: Ayr Wellness is a cannabis company involved in the cultivation, manufacturing, and dispensing of cannabis and cannabis-derived products. The company’s product portfolio includes flowers, tinctures, edibles, and vape products under brands including Kynd, Origyn, Stix Preroll, Levia, and Road Tripper. Ayr Wellness also trades OTC in the U.S. under the ticker AYRWF. In late July, Ayr announced the opening of dispensaries in Pennsylvania and Florida. The company now has nine medical dispensaries in Pennsylvania and 49 dispensaries in Florida.
  • GrowGeneration Corp.: GrowGeneration operates hydroponic garden centers across North America. The company markets and distributes a variety of hydroponic gardening products, including growing media, nutrients, lighting, ventilation equipment, and more. It operates over 60 retail and distribution centers nationwide. GrowGeneration reported on Aug. 4 earnings results for Q2 2022. It posted a net loss of $136.4 million compared with net income for the prior-year quarter. Revenue fell year-over-year (YOY). The net income results include a $127.8 million impairment expense for goodwill and other intangibles.
  • Cresco Labs Inc.: Cresco Labs is a consumer-packaged cannabis products company involved in growing, manufacturing, and distribution. The company operates in 10 states, including more than 70 total production facilities and dispensaries. Its brands include Cresco, Remedi, High Supply, Wonder Wellness Co., Mindy’s, Good News, Sunnyside, and FloraCal Farms. Cresco Labs’ stock also trades OTC in the U.S. under the ticker CRLBF. On July 15, Cresco reported that Columbia Care Inc., a cultivator and maker of cannabis products, had obtained the final order from the Supreme Court of British Columbia approving its business combination with Cresco Labs. Per the agreement, Cresco will acquire all outstanding shares of Columbia Care. The combination is expected to close in Q4 2022. Terms of the deal were not disclosed,.
  • Jushi Holdings Inc.: Jushi Holdings is a holding company focused on branded cannabis and hemp-based assets. The company is engaged in retail, distribution, cultivation, and processing operations. Its brands include: The Bank, focused on plant genetics and cultivation; The Lab, specializing in vape products and concentrates; Nira+, a producer of medicinal THC products; Sèche, which offers various branded ground and flower cannabis products; and Tasteology, a provider of THC-infused products. Jushi also trades OTC in the U.S. under the ticker JUSHF. On Aug. 8, Jushi announced it had reached a confidential settlement agreement with Curaleaf Holdings Inc. and Edward Kremer, former chief financial officer (CFO) of Jushi. The agreement resolves Jushi’s claim against Kremer for breach of employment agreement and against Curaleaf for tortious interference. As part of the agreement, Kremer received a limited waiver of his non-compete deal to enable him to accept employment at Curaleaf.
  • Aurora Cannabis Inc.: Aurora Cannabis is a Canada-based company specializing in production, distribution, and sales of medical cannabis products. Its brands include Aurora, Aurora Drift, Daily Special, MedReleaf, Whistler, and more. The company’s growth strategy targets medical cannabis markets across the globe as well as the U.S. hemp-derived CBD market and the Canadian recreational market.

Fastest-Growing Marijuana Stocks

These are the marijuana stocks with the highest year-over-year (YOY) sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue organically or through other means and find growing companies that have not yet reached profitability. In addition, accounting factors that may not reflect the overall strength of the business can significantly influence earnings per share. However, sales growth can also be potentially misleading about the strength of a business because growing sales for money-losing businesses can be harmful if the companies have no plan to reach profitability.

Fastest-Growing Marijuana Stocks
Price ($) Market Cap ($B) Revenue Growth (%)
Cronos Group Inc. (CRON) 3.58 1.3 98.5
Ayr Wellness Inc. (AYR.A.CX) CA$6.36 CA$0.4 90.6
OrganiGram Holdings Inc. (OGI) 1.19 0.4 82.8
SNDL Inc. (SNDL) 2.81 0.7 77.9
Verano Holdings Corp. (VRNO.CX) CA$7.00 CA$2.1 67.4
  • Cronos Group Inc.: Cronos Group is a Canada-based cannabis company focused on advancing cannabis research, technology, and product development. Its international brand portfolio includes Spinach, Happy Dance, and PEACE+.
  • Ayr Wellness Inc.: See above for company description.
  • OrganiGram Holdings Inc.: Organigram Holdings is a Canada-based producer of medical and recreational cannabis. Its subsidiaries include Organigram Inc., Laurentian Organic Inc., and The Edibles and Infusions Corp., and its brands include Edison Cannabis Co., SHRED, and monjour, among others. On July 14, Organigram reported earnings for Q3 FY 2022 ended May 31. Its net loss narrowed YOY as revenue surged to record quarterly levels. The company attributed revenue growth to new product listings, increased retail sales momentum, and growing international shipments.
  • SNDL Inc.: SNDL is a Canada-based cannabis producer. The company operates cultivation and processing facilities, retail stores, and sells alcoholic beverages. Its cannabis brands include Sundial, Top Leaf, Palmetto, and Grasslands. At its annual and special shareholder meeting in late July, the company officially changed its name from Sundial Growers Inc. to SNDL Inc. It also effected a share consolidation under which 10 pre-consolidation common shares were consolidated into one post-consolidation common share, effective July 25.
  • Verano Holdings Corp.: Verano Holdings is a vertically integrated, multi-state cannabis operator. The company produces a wide range of medical and adult-use cannabis products. It owns and operates 13 cultivation and manufacturing facilities and owns over 100 dispensaries in a number of states throughout the U.S. The company’s stock also trades OTC in the U.S. under the ticker VRNOF. On Aug. 5, the company announced the opening of its 54th dispensary location in Florida.

Marijuana Stocks With the Best Performance

These are the marijuana stocks that had the smallest declines in total return over the past 12 months out of the companies we looked at.

See also  Cannabis Seeds Nl
Marijuana Stocks With the Best Performance
Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
4Front Ventures Corp. (FFNT.CX) CA$0.71 CA$0.4 -50.0
Cronos Group Inc. (CRON) 3.58 1.3 -51.0
OrganiGram Holdings Inc. (OGI) 1.19 0.4 -55.8
Innovative Industrial Properties Inc. (IIPR) 93.65 2.6 -57.5
Jushi Holdings Inc. (JUSH.CX) CA$2.63 CA$0.5 -59.6
Russell 1000 N/A N/A -7.1
ETFMG Alternative Harvest ETF (MJ) N/A N/A -63.7
  • 4Front Ventures Corp.: 4Front Ventures is a cannabis operator and retailer operating across multiple states. It owns, operates, or manages cultivation and manufacturing properties in five states and employs over 600. Its stores attracted more than one million unique customers in 2021. 4Front also trades OTC under the symbol FFNTF.
  • Cronos Group Inc.: See above for company description.
  • OrganiGram Holdings Inc.: See above for company description.
  • Innovative Industrial Properties Inc.: Innovative Industrial Properties is a real estate investment trust (REIT) that engages in the acquisition, disposition, development, and management of industrial facilities leased to tenants in the regulated medical cannabis industry. The company’s portfolio consists of specialized industrial and greenhouse buildings leased to state-licensed, medical-use cannabis cultivators across the U.S. It reported Q2 2022 earnings results on Aug. 3. Net income climbed by 37.1% YOY while total revenues grew by 44.3%. The acquisition and leasing of new properties and additional improvement allowances both contributed to growth During the quarter, IIP established new tenant relationships with a variety of cannabis companies including Maryland Cultivation and Processing LLC, Texas Original Holdings LLC, and TILT Holdings Inc.
  • Jushi Holdings Inc.: See above for company description.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

The Cannabis Stock Market Is Growing Up

Cannabis stocks have reached the mainstream, and some of them are soaring on the New York Stock Exchange. Like any hot new sector, the cannabis industry can be confusing for an individual investor, and the risk of losing money is real. Can you safely invest in cannabis stocks today?

Cannabis cultivation, cannabis history, cannabis culture

Cannabis company stocks have piqued the interest of the international mainstream, in large part due to Canada’s landmark legalization of cannabis. The hype is further boosted by consistent progress at a state level in the US, and high hopes for similar scenarios in many European nations. The consequent demand for medical, nutraceutical and recreational products will potentially drive big earnings for cannabis companies. The ones listed on stock exchanges will see the price of their stock go to the moon, making the smart stoners who bought those securities much richer and happier. Right? No, wrong.

Thanks to the due normalisation of the plant, huge growth across a few vertical markets is easily forecasted. Cannabis pharmaceuticals, adult use, beauty and healthcare, nutraceuticals, pain and sleep control, and likely some other sub-sectors will thrive in the legal cannabis global market. Even Big Pharma, Big Tobacco, and Big Beverage boys can’t hide their interest in this huge business. Yet this doesn’t mean there’s room for everyone. And first of all, it doesn’t mean cannabis stock prices will go any higher from where they are trading right now, despite any worldwide developments.

THE TECH BUBBLE LESSON

Just like many new industries entering the markets, the whole cannabis sector is subject to speculation and huge fluctuations in stock prices, at least until the sector finds a balance. This, of course, can take several years. The lesson learned with tech stocks in the late ‘90s is that even successful leaders of industry struggle to maintain the high stock price they reach when hype is at its max. In other words, Microsoft stock reached its height of 58 dollars at the end of 1999, while today it sits at $36, and it’s unlikely to fluctuate greatly in the future because Microsoft is not a “growth company” anymore. Microsoft and other companies from the tech industry boom are now global giants that keep rewarding their investors and stock traders, but if you bought any tech stock in 1999 and kept it in your portfolio, right now you wouldn’t be so happy about your investment.

So what about cannabis stocks? Well, a good example is Tilray, who entered the Nasdaq with a booming initial public offering that brought the stock to over 200 USD in September 2018, only to fall to 100 USD at the end of November. Does this mean people discovered they sell crappy hemp? Not likely; but if you now have to sit and wait for the price of this stock to recover 100% of its actual value, then Tilray’s weed tastes awful to you.

As opposed, if you invested in the cannabis industry over the past couple of years, there’s a good chance that you are making some money, since many cannabis stocks have grown in price over the last 3 years. The bottom line is, “timing is crucial”. And by the way, back to the Microsoft example, it’s good to know that if your mom or grandpa had invested one month’s wage in a tech company back in the ‘70s and sold their stocks in 2000, you probably wouldn’t need to work today. This is the power of being early birds in emerging markets.

RISKS AND OPPORTUNITIES OF AN EMERGING INDUSTRY

The cannabis industry is very young. Early birds can have difficulty understanding the various business models, and financial information provided by businesses is not always straightforward and transparent. Cannabis stock prices are subject to huge fluctuations due to general market sentiment and the dynamics of worldwide cannabis reform. Furthermore, none of these cannabis companies are making profits right now, thus their stock price relies exclusively on forecasted earnings in a highly competitive market that has just started to be regulated.

While a few companies were already listed on secondary trading markets, in 2018 the first cannabis businesses were listed on the major American stock exchanges NYSE and Nasdaq. Cronos Group started trading on Nasdaq in February and Canopy Growth was listed on NYSE in May, followed by Tilray in June who entered the market as the first cannabis growing company raising capital via a Nasdaq listing. Since then, a bunch of new cannabis players have started crowding the main exchanges in New York and Toronto, and the less regulated OTC markets as well.

Many cannabis enthusiasts, or simply money enthusiasts, are throwing their bucks at cannabis stocks, fearing missing out on big gains. But most of these people do not have investing experience, or have taken the time to research each company’s financial and business information. Going over data and corporate documents is not easy, and most people don’t have complete access to this information. As a result, the average private investor places their bet on something they don’t know. This is not necessarily bad—just be aware of it.

THE GREEN RUSH

Stock markets can be approached as a trader or as an investor, or maybe as something in-between. As long-term investments, cannabis stocks provide next to zero guarantees of returning the invested money; thus, they are a great place to put some money you really, but really, won’t ever need. On the other hand, a cannabis stock trader can have fun with these stocks, as much as with thousands of other financial assets made for trading.

See also  Fruity Pebbles Cannabis Seeds

Despite most cannabis stocks today being Canadian, the companies listed only on the Toronto Stock Exchange are not mentioned here because investing in the Canadian stock market might be complicated for an individual based in Europe. However, several Canadian companies are listed both on Toronto and New York exchanges. The stocks trading on OTC minor exchanges are not listed here either; their extreme volatility and low liquidity make them a very risky and, after all, inconvenient trade. Ok, it’s now time to take a look at the most-traded cannabis stocks and their business model.

  • 22nd Century Group Inc.(NYSE: XXII) is a biotechnology company developing technologies that allow increasing or decreasing the level of nicotine in tobacco plants—and cannabinoids in cannabis plants—through genetic engineering and plant breeding. The company has proprietary hemp strains with less than 0.3% THC. 1 year performance: + 30% / 3 months performance: +12%.
  • Canopy Growth Corp. (NYSE: CGC) was formerly known as Tweed. Its products include flowers, oils, concentrates, and softgel capsules. The company offers its products under various brand names such as Tweed, Black Label, Spectrum Cannabis, DNA Genetics, Leafs By Snoop, Bedrocan Canada, CraftGrow, Foria. 1 year performance: +145% / 3 months performance: -24%.
  • Cronos Group Inc. (NASDAQ: CRON) is a financial company that invests in cannabis businesses able to produce medical cannabis in compliance with Canada’s regulations. 1 year performance: +180% / 3 months performance: -5%.
  • Tilray Inc. (NASDAQ: TLRY) engages in the research, cultivation, processing, and distribution of medical cannabis in Canada and several other countries like Argentina, Australia, Chile, Croatia, Czech Republic, Germany, New Zealand, and South Africa. 1 year performance: not applicable / 3 months performance: +57%.
  • Cannae Hldg. (NYSE: CNNE) is an investment firm that acquires stakes in technology, healthcare services, restaurants, financial services, and other businesses related to the cannabis market. 1 year performance: -4% / 3 months performance: -10%.
  • Aurora Cannabis (NYSE: ACB) is active across various segments of the cannabis value chain, from facility design to cannabis breeding, production, processing, product development, wholesale, and retail distribution. The company has global operations in 19 countries. 1 year performance: -1.5% / 3 months performance: -13%.
  • Aphria (NYSE: APHA) produces and sells medical cannabis to patients and health professionals in Canada and several other countries. 1 year performance: -8% / 3 months performance: -38%.

www.cannabismarketcap.io

SMALL PHARMA GROWING UP

Several pharma and biotech companies have started to work with natural and synthetic cannabinoids, resulting in fully developed products or candidates undergoing clinical trials. Here is a short selection of pharma companies that are fully involved in the development of drugs targeting the endocannabinoid system.

  • GW Pharmaceuticals PLC (NASDAQ: GWPH) was founded in 1998 and is based in the UK. GW is the European leader in developing cannabinoid prescription medicines derived from the cannabis plant. Epidiolex and Sativex are its lead products. 1 year performance: +50% / 3 months performance: +42%.
  • Arena Pharmaceuticals (NASDAQ: ARNA) is a biopharma company, with part of its research oriented on cannabinoid medicines. Its new drug Olorinab addresses Crohn’s disease, targeting the CB2 cannabinoid receptor. 1 year performance: +32% / 3 months performance: -6%.
  • Cara Therapeutics (NASDAQ: CARA) is a biotech company with a few drugs in the clinical stage, such as a cannabinoid receptor agonist being studied as a treatment for neuropathic pain. 1 year performance: +46% / 3 months performance: -10%.
  • Intec Pharma (NASDAQ: NTEC) developed an oral drug delivery technology that can be used to deliver CBD and THC to treat various conditions. 1 year performance: -19% / 3 months performance: -15%.
  • Zynerba Pharmaceuticals Inc. (NASDAQ: ZYNE) is a small pharma company developing transdermal cannabinoid treatments for rare or near-rare neuropsychiatric disorders and certain refractory epilepsies. 1 year performance: -65% / 3 months performance: -40%.
  • Insys Therapeutics (NASDAQ: INSY) has a few synthetic cannabinoid-based drugs coming down the pike, and spent hundreds of thousands of dollars trying to slow down cannabis legalization in the US, while pressing for a looser regulatory framework for synthetic cannabinoids. 1 year performance: +13% / 3 months performance: -35%.

ANCILLARY SERVICES: INVESTING IN THE TOOLS

There are a number of services and product providers coming from outside the cannabis industry that have gotten on board since legalization gained traction. Most of these companies are considered hybrid plays since their business is not strictly focussed on the cannabis industry. But they would benefit a lot from strong growth in this sector. Plant nutrition, pest control, facility management, lighting systems, and hydroponics are some of these ancillary services and products.

  • Scotts Miracle-Gro Co. (NYSE: SMG) is a provider of gardening products that’s been focussed in the last few years on entering the cannabis market by acquiring companies in sub-sectors like hydroponics. 1 year performance: -23% / 3 months performance: +2%.
  • Marrone Bio Innovations Inc. (NASDAQ: MBII) is a producer of pest-control and plant health compounds, with one business line focussed on cannabis pests such as powdery mildew and mites. 1 year performance: +38% / 3 months performance: -27%.

DRINKS AND TOBACCO

It is safe to say that all major tobacco and beverage corporations have their plans to enter the cannabis market as soon as it looks proper. Tobacco corporations are experiencing a decline in their traditional business, and for sure they won’t miss this train. As an example, Altria (NYSE: MO) is the company that makes Marlboro cigarettes, among many others. After being interested in buying a minority stake in the Canadian cannabis company Aphria, the tobacco giant may want to buy cannabis company Cronos Group, even if at the moment the companies have not yet reached an agreement. These kinds of rumours usually generate big swings in cannabis stock prices, which can be traded for a profit, or a loss.

  • Coca-Cola (NYSE: KO) declared it was considering CBD as a possible ingredient for a new generation of wellness beverages, while there used to be rumours of its possible investment in Canadian company Aurora Cannabis. In the meantime, Constellation Brands (NYSE: STZ), which makes Corona beer, raised its stake in Canopy Growth by 38% with a 4 billion USD investment. Constellation Brands’ 1 year performance is about -10%, while its 3 months is around -6%.
  • New Age Beverage (NASDAQ: NBEV) develops and markets “healthy” beverages. The company has announced a line of CBD-infused drinks, and its stock price has been soaring. 1 year performance: +104% / 3 months performance: +112%.
  • Youngevity International Inc. (NASDAQ: YGYI) is a lifestyle company with a hybrid business model and a range of food, beverage, beauty, and wellness products. In August 2018, Youngevity announced entering the cannabis industry with the launch of its Hemp FX product line and its stock had a nice rally. 1 year performance: +45% / 3 months performance: +90%.
  • The Canadian branch of Molson Coors (NYSE: TAP) has a solid joint venture with The Hydropothecary Corporation to produce cannabis drinks for the Canadian market; Lagunitas, the beer brand owned by Heineken, is selling cannabis-infused sparkling water in California. Cheers!

INVEST, WITH NO HURRY

It will take a few years before the leaders and the fast growers really emerge in the stock markets. Today, it seems wise to focus on companies with at least an adequate capitalisation, without relying upon press releases or social media hype. Except for the drinks and tobacco giants, and a few others, most of the cannabis companies are in a startup phase, and they can show zero earnings.

Even in the most optimistic worldwide legalization scenario, it is unlikely all these companies will generate enough profit to justify their actual price/future earnings ratio. Yet, this shouldn’t prevent us from scoping out future leaders and placing a bet as a long-term investment. Likewise, an experienced trader might want to buy some cannabis stock on their upward momentum, aiming to sell after a few hours, days, or weeks for a quick gain on the market hype.

Finally, it is also possible to invest in ETFs like Horizons Marijuana Life Sciences Index and ETFMG Alternative Harvest. These are funds that contain selected cannabis stocks and can be bought or sold online just like any other security, avoiding the risk of being invested in a single, or in just a few, companies within the sector. Whatever financial tool you decide to use, we have to reiterate that investing and trading stocks is a rational task that requires a little knowledge. Buying a security driven by your heart is not a good way to try and make some money!