As marijuana legalization sweeps across the nation, the financial opportunities continue to manifest, with many referring to the potential of the marijuana industry as the “green rush.” Marijuana related profits used to be contained to the black market, but the advent of legalization has meant those profits have spread to the people; those in business, those employed by marijuana related businesses and those who experience the benefits through state tax revenue. These are not the only ways the industry has been spreading the love, however. Cannabis stocks have also hit the market and this underscores the level to which the industry has reached the mainstream. Those looking to invest in the best cannabis stocks will have to do their research before jumping in.
Canopy Growth Corps. Remains the Industry Giant
Even if you’ve had no interest in investing in cannabis stocks, you’ve probably heard of Canopy Growth Corps.; a company that began trading on the New York Stock Exchange back in May as CGC. Canopy is one of the biggest names in the Canadian cannabis industry with production capacity far exceeding any of its competitors. Canopy is so big, in fact, that its operations have extended well beyond the borders of Canada and show even further signs of growth through a massive deal with Constellation Brands beverage company. Many investors still regard Canopy as one of the best cannabis stocks despite the plunge following Canada’s legal sales last week. A lot of this confidence stems from distribution contracts the cannabis giant holds with a staggering 8 Canadian provinces.
Cronos Group’s Hard Times
Cronos began trading on the NASDAQ under CRON in February and, in terms of operation size, trails Canopy considerably. However, it’s still a major name in the cannabis industry and its brand was further strengthened by a lofty contract with Cura Cannabis, a major provider of cannabis oil on a global scale. Cronos fell victim to the drop that seemed to hit pretty much every cannabis stock following the official sales of Canadian recreational marijuana and many analysts see it as a major risk. However, it could also be an ideal time to buy low with the anticipation that, as the dust of Canada’s legalization settles, many more opportunities to sell high will occur.
MedMen Bring the U.S. to Canada
If you live in one of the legal states, you’ve almost definitely heard of MedMen and maybe even frequent one of their many dispensaries. The U.S.-based cannabis company trades on the OTC markets under MMNFF, gaining interest through the reliability of its dispensaries. They’re currently ensconced in an ambitious U.S. expansion with a primary focus on Florida but have also teamed with Cronos for their Canadian projects. If you’re looking to throw your cash behind a U.S. company, MedMen may be the one for you.
Cannabis Stocks are Still a Risk
Investing in cannabis stocks while the industry is beginning to bloom seems like a sound idea but there is still a lot of risk involved. Due to the fact the plant is still illegal on a federal level, banking presents itself as a large concern. Financial institutions risk breaking federal law should they get involved with marijuana related businesses and, therefore, cash management becomes a huge issue. With the industry only just beginning to bloom, it’s also hard to determine the best cannabis stocks in advance. Which companies will rise and which will fall? There are so many businesses flooding the market today. Not all will rise to the top of the industry and betting on any of them will present an obvious gamble.
Despite all of the this, there are some companies worth taking a look at. The main idea is to look at the companies that present the least kind of legal risk moving forward while still showing a lot of room to grow along with the industry and companies with a proven record of being managed correctly.
What if You Don’t Want to Invest Directly in Cannabis?
Rather than directly investing in marijuana itself, you can invest in pharmaceutical companies that are pursuing products based on compounds found in marijuana. This presents you with an option that is legal on a federal level. GW Pharmaceuticals (NASDAQ:GWPH) is a U.K. based company of this nature. It makes therapeutic products derived from cannabinoid derivatives. The biopharmaceutical structure makes it more credible to regulators. Another company like this is AbbVie (NASDAQ:ABBV). They create Marinol, which contains a synthetic form of THC, given to AIDS patients to treat nausea and vomiting.
Betting on Established Business
Scotts Miracle-Gro (NYSE:SMG) is another company that may be worth a look. They have been in business for over a hundred years, making grass seeds and fertilizers. They have recently entered the marijuana industry, making lines of products for those wishing to grow their own plants. Well-established companies that serve the marijuana industry are a good way to enter the growing industry in a safe and steady way.
The best cannabis stocks are going to be the ones that ultimately speak to you. It’s important to research the company in which you are investing, making sure they seem well managed, stable and able to deal with the marijuana laws as they continue to change.
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Author: Bertram Joyner
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