This first set of marijuana stocks is mainly comprised of suppliers and growers. That isn’t surprising since the legal pot business is still very new. Like many other early-stage industries, the weed business is mainly populated by enterprises that provide the good directly.
In Canada it is a thriving business, where medical marijuana was legalized in 2001 throughout the country. In addition, the federal government is drafting laws currently that would legalize its recreational use on a national level. It could passes into law as early as July 2018.
There have been several companies sprout up in order to meet the demand, with a handful of them appearing on the stock exchanges. In market capitalization terms, the largest of them is Canopy Growth (NASDAQOTH: TWMJF). The company has seen rapid expansion mainly due to strategic acquisitions. Several of them have been overseas peer companies, since the Canadian government has issued a license to Canopy Growth to export some of the product it produces.
The latest quarterly revenue for Canopy Growth was 15.9 million CAD ($12.7 million), and that was more than twice what was earned in the previous year by the company during the same period. However, the company has been in the red recently due to acquisition expenditures.
Following Canopy Growth are the other suppliers MedReleaf, Aurora Cannabis, and Aphria. All three of these companies have seen impressive growth due to expansion, although there has been spotty profitability.
Cannabinoids, which are the chemical compounds contained in marijuana, seem to have some medicinal properties. Therefore, it isn’t surprising that many biotech companies are now developing treatments that use them.
GW Pharmaceuticals (NASDAQ: GWPH) is the leader of the group. GW Pharma is based in the UK and is mainly a development-stage biotech company. Sativex is the one product that it has out on the shelves, which is a spray medication for treating spasticity in multiple sclerosis patients. GW Pharma has been given approvals in a total of 16 markets for its drug, and has a pending application in another 12 markets (however, the U.S, is not in either of these groups).
Epidiolex is a promising treatment that is under development currently. It has been indicated by clinical trials that it is effective in fighting two kinds of childhood-onset epilepsy. Lately, the stock of GW Pharma has been somewhat of a see saw. However, if Epidiolex is able to fulfill its promise then it could potentially skyrocket.
Some of the other biotechs that partially or exclusively concentrate on post chemical-based treatments include Insys Therapeutics, Cara Therapeutics, Arena Pharmaceuticals, Corbus Pharmaceuticals, Axim Biotechnologies, and Zynerba Pharmaceuticals.
Funds, picks, and shovels
The smallest, and third, marijuana stocks category varies widely to the point that it can be labeled miscellaneous. Scotts Miracle-Gro (NYSE:SMG) is the leading stock in this category, which is the very same well-known lawn and garden care product supplier.
Not only is Scotts Miracle-Gro categorized with marijuana stocks due to the fact that its products help the plants grow much better. Hawthorne Gardening is also owned by the company which is a group of brands servicing the hydroponics market (or growing plants in water, which is a classic pot cultivation method).
CEO Jim Hagerdorn of Scotts Miracle-Gro states that the results from Hawthrone have significantly exceeded their expectations. In its parent’s third quarter, this subsidiary enjoyed 21% growth in its organic sales, and there are almost certain to be new acquisitions in the cards for Hawthorne.
There is also Medical Marijuana, Inc. (NASDAQOTH: MJNA), which ic basically a fund made up of marijuana-related companies. They included both publicly traded stocks (Axim Biotechnologies) as well as ones that are not (MPS International and HempMeds).
The Canada-based Cronos Group goes with the collection-of-assets approach as well. It owns three small businesses outright, and also holds strategic stakes in another three businesses. All of the companies are sellers and producers.
Is Pot a Boom or a Bust?
The legal status of the drug is the main caveat that needs to be considered before investing in any aspect that relates to the marijuana business. In the United States, although eight states have legalized marijuana for recreational use, and in 28 states for medicinal purposes, at the Federal level it’s still technically illegal. Jeff Sessions, the U.S. Attorney General, has indicated that he is going to take a tougher stance on pot. However, there have been no concrete steps taken yet.
As mentioned previously, although Canada is aiming to go the complete recreational route, for this purpose, marijuana still isn’t legal there yet.
Potential investors of this sector must bear all of the legal points completely in mind and be aware of the fact that all marijuana stocks carry higher risk compared to many other kinds of companies they could buy into.