Marijuana stocks are equities issued by publicly traded companies involved in the legal cannabis industry. This industry spans across the world with the countries of Canada, the United States, and Australia staking claim to some of the largest marijuana stocks in the market as of 2018.
Marijuana Stocks: A Brief History
Marijuana stocks began to gain popularity in late 2013 and early 2014 as the first state in the United States, Colorado decided to enact Colorado Amendment 64. This brought about a series of companies, both public and private who began to enter this industry. Similar to the gold rush, the early days of recreational marijuana legalization brought about much speculation and in some cases fraudulent behavior that lead to several public companies getting shut down by the Securities and Exchange Commission.
After the boom and bust in 2014, Marijuana stocks saw attention wither slightly as scepticism surrounding the industry based on the delisting or halting of several of these public companies. In a formal investor alert, the SEC's Elisha Frank, co-chair of the SEC Enforcement Division's Microcap Fraud Task Force, said "Recent changes in state laws concerning medical and recreational marijuana have created new opportunities for penny stock fraud. Wherever we see incomplete or misleading disclosures, we act quickly to protect investors."
However, following these developments, numerous news outlets like MarijuanaStocks.com, Forbes.com, and even Jim Cramer's TheStreet.com began to formally cover the industry in full detail to help the investment community decipher between which cannabis companies were real and which companies may have ulterior motives to their supposed cannabusinesses. Though Canada's medical marijuana industry had been legal for over a decade at the time, much of the attention was placed on the US marijuana industry. In fact, the marijuana industry growth has been a main attraction to this industry still, 4 years later. In 2014, pot stocks and private businesses helped the industry generate some $4.6 billion. The following year the industry grew to $5.4 billion. This equates to roughly a 17% growth rate and this growth has continued:
|Year||Sales (in Billions, USD)|
Marijuana Stocks & Diversity Of Investment
Since 2014, sales of legal marijuana in the United States alone have increased by more than 100% and it has been this growth that has helped many stocks in this sector continue their growth. One of the larger impacts that have also aided the industry as of 2017 and 2018 was the new legalization for recreational marijuana across the country of Canada. The Canadian Prime Minister Justin Trudeau stated that Canada would legalize the drug accross the country for recreational use in 2018. In lieu of this, some companies in the US have made a move to invest in marijuana stocks in Canada.
Constellation Brands made an investment into Canadian company Canopy Growth for a little under USD $200,000, which equated to 9.9% of Canopy Growth. This moved market one of the largest investments directly into a marijuana company since Colorado had first legalized recreational marijuana. Following this move, many Canadian marijuana stocks rose significantly. This helped to further legitimize the cannabis industry as a viable investment opportunity that has turned a complete 180 from what the shaded past during the earlier years as far as the stock market was concerned.
The significance of legalized marijuana and the ability of investors to be able to participate through direct investment into companies involved allows market participants to grow as the new industry grows. Many times the industry is compared to that of the alcohol industry as both underwent prohibition and both were/are seen as Sin Industries. The difference with marijuana stocks in particular is that there may also be opportunities for this substance across multiple categories including but not limited to pharmaceutical, healthcare, biotechnology, agriculture, construction, technology, and even power.
Where some industry like mining, for instance, will impact certain things like water, power, construction and the like, cannabis has a unique place in numerous related and unrelated segments. Its uses for thing like hemp based foods or hemp based building material make it perfect for the food industry and construction. Its medicinal characteristics also make it applicable for biotechnology and pharmaceutical purposes as well. This diversity puts cannabis stocks among few industries that investors can benefit from based on a multitude of offshoots.
Industry Events That Affected The Market
- Colorado begins legalized recreational marijuana retails sales - 2014
- SEC enacts measures to protect the investing community from fraud - 2014
- Cannabis sales begin to grow, researchers begin to report - 2015
- Focus on the medical application of cannabis takes hold, GW Pharma releases positive results from Phase 3 trials of Epidiolex - 2016
- US President Donald Trump is elected - 2016
- Jeff Sessions is made Attorney General 2016/2017
- Horizons Marijuana Stock ETF launches - 2017
- Canopy Growth gains investment from Constellation Brands - 2017
- New marijuana stock ETF's begin hitting the US market - 2018
- Canada passes second reading of Bill C-45 - 2018
|Company Name||Stock Symbol (US)||Stock Symbol (Other)|
|AEROGROW INTL INC||(AERO)|
|Abcann Global||(ABCCF)||CVE: ABCN|
|Aurora Cannabis Inc.||(ACBFF)||TSE: ACB|
|Future Farms technologies Inc.||(FFRMF)||CNSX: FFT|
|Aphria Inc.||(APHQF)||TSE: APH|
|Abattis Bioceuticals Corp||(ATTBF)||CNSX: ATT|
|AXIM Biotechnologies, Inc.||(AXIM)|
|Blue Line Protection Group, Inc.||(BLPG)|
|General Cannabis Corp||(CANN)|
|Cara Therapeutics Inc.||(CARA)|
|Cannabis Sativa, Inc.||(CBDS)|
|Cannimed Therapeutics||(CMMDF)||TSE: CMED|
|Cannabis Science, Inc.||(CBIS )|
|Canntrust Holdings||(CNTTF)||TSE: TRST|
|CannaGrow Holdings, Inc.||(CGRW)|
|Cann Group Ltd.||(CNGGF)||ASX: CAN|
|Canopy Growth Corporation||(TWMJF)||TSE: WEED|
|Captor Capital||(NWURF)||CNSX: CPTR|
|United Cannabis Corporation||(CNAB)|
|CV Sciences, Inc.||(CVSI)|
|Emblem Corp.||(EMMBF)||CVE: EMC|
|Emerald Health Therapeutics||(EMHTF)||CVE: EMH|
|American Green, Inc.||(ERBB)|
|Growblox Sciences, Inc.||(GBLX)|
|GreenGro Technologies, Inc.||(GRNH)|
|GW Pharmaceuticals plc||(GWPH)|
|Innovative Industrial Properties, Inc.||(IIPR)|
|InMed Pharmaceuticals Inc.||(IMLFF)||CNSX: IN|
|Indoor Harvest Corp.||(INQD)|
|Invictus MD Strategies Corp||(IVITF)||TSX: GENE|
|ISODIOL INTERNATIONAL||(ISOLF)||CNSX: ISOL|
|iAnthus Capital Holdings||(ITHUF)||CNSX: IAN|
|Kaya Holdings Inc||(KAYS)|
|Kush Bottles, Inc.||(KSHB)|
|Lifestyle Delivery Systems Inc||(LDSYF)||CNSX: LDS|
|Maricann Group||(MRRCF)||CNSX: MARI|
|Medical Marijuana, Inc.||(MJNA)|
|MedReleaf Corp||(MEDFF)||TSE: LEAF|
|MJ Holdings, Inc.||(MJNE)|
|Mentor Capital, Inc.||(MNTR)|
|Medicine Man Technologies, Inc.||(MDCL)|
|Mountain High Acquisitions Corp.||(MYHI)|
|Novus Acquisition & Development Corp.||(NDEV)|
|Namaste Technologies Inc.||(NXTTF)||CNSX: N|
|OrganiGram Holdings Inc.||(OGRMF)||CVE: OGI|
|Plandaí Biotechnology, Inc.||(PLPL)|
|PotNetwork Holding, Inc.||(POTN)|
|Rocky Mountain High Brands, Inc.||(RMHB)|
|Rockshield Capital Corp||(CRUOF)||CNSX: RKS|
|The Scotts Miracle-Gro Company||(SMG)|
|Supreme Pharmaceuticals Inc.||(SPRWF)||TSXV: FIRE|
|Tech Care Corp||(TECR)|
|Terra Tech Corp.||(TRTC)|
|Two Rivers Water & Farming Company||(TURV)|
|22nd Century Group, Inc.||(XXII )|
|Zynerba Pharmaceuticals, Inc.||(ZYNE)|
Notable Social Media Links
Reddit: Marijuana Stocks
Facebook: Marijuana Stocks
Marijuana stocks have generally been greatly influenced by current events in legalization and politics. Most recently the industry has been focusing on the Trump organization and mainly that of AG Jeff Sessions. His stance on legal marijuana has been the opposite of popular opinion and several waves of comments from the Attorney General have made an impact on the industry as a whole:
- Sessions announces end to policy that allowed legal pot to flourish
- 'Right Now It's Chaotic.' Jeff Sessions' Marijuana Move Is Jeopardizing the Pot Industry
However recent developments during early 2018 have shed a less abrasive light on the industry form the purview of the government:
In both cases, comments made by government officials had both a negative and positive impact on the market. For marijuana stock investors, the industry is still young and has been open to greater shifts in momentum due to government intervention.
Updated data that was put out by Energias Market Research company shows that growth is projected to increase significantly from $8.28 billion in 2017 to $28.07 billion in 2024, which is a CAGR of 19.1% from 2018 to 2024. Major drivers to this growth the growth include more recognition of the role that marijuana plays from a medical aspect as well as higher demand for treatment on top of more research and development programs being undertaken. One of the fastest growing markets for cannabis is the United States. So far it has a total of 28 states that have some for of legal marijuana laws in place (medical and/or recreational). The states of California and Alaska as well as Massachusetts and Nevada have benefited from the recreational legalization of the drug as far as generating new tax revenue as well as increased job creation.
In fact, many states have taken a hard lined stance in this industry vowing to fight anti-marijuana laws that the US government continues to attempt to instill. Alaska, for instance is one of these states. Adam Wool, a Democrat from one of Alaska's major marijuana-growing areas has been quoted in saying, "If the federal government wants to prosecute someone for breaking federal law, I guess they have every right to do that. I'm just saying, we will have no obligation to assist them."
What also needs to be kept in mind is that despite the harsh time period for the War on Drugs targeting things like marijuana, countless U.S. Politicians have acknowledged that they have used cannabis in the past.
Marijuana stocks in Canada, however, could be seeing fewer obstacles as far as political policy is concerned. The recent approval by parliament that continued the progress of the country's legal recreational marijuana laws. In a 44-29 win, the Canadian Senate voted in favor of moving forward Bill C-45. This is one of 2 bills that would put into action the legal outline for marijuana distribution and production in Canada. Now, the bill moves on to be studied by multiple committees that will look at numerous aspects of the legal marijuana plan with a final vote planned for sometime in summer, 2018.
In many cases of political change, marijuana stocks can be swayed. Events that benefit the industry tend to move the charts higher and negative legislation or potential hurdles of legalization typically push the needle back.
Risks For Investors Of Marijuana Stocks
Even though there are supporters of the marijuana industry and marijuana stocks in general, there are also a number of those who oppose this market as well. Besides attorney General Jeff Sessions being openly against the industry, there are similar participants within the stock market as well. Many of those who are against marijuana stocks tend to look at several downfalls that this industry has, compared to other, more established industries.
- Access To Banking
- Business in this space are limited as far as access to banking services since marijuana is still federally illegal in the eyes of the U.S. government. Many financial institutions tend to steer clear of companies within the space because of this fact. Without traditional banking access, many large investors like Mark Cuban are staying away from an investment into marijuana stocks right now. He's come right out to say that "There are so many complicated issues in the industry, like dealing with banks and all of the regulatory red tape. It's not going to get simpler, so I'd rather invest elsewhere."
- Limited Access For Large Investment Banks & Hedge Funds Due To Listing Restrictions
- Marijuana stocks may seem to be trading like crazy and many stocks will trade millions of dollars per day. But for large Wall Street funds to get involved, they not only have to be trading large volumes but they also need to be able to actually buy the stock for their investors. Since many of these stocks are still listed on the Over The Counter exchange or are considered penny stocks, access to these investments is very limited for larger funds & investment firms.
- Marijuana Is Still Not Federally Legal
- Similar to the banking issue, the fact that cannabis is still not legal on a federal means that the industry itself could potentially be shut down by the federal government. Not only would that mean billions in tax dollars lost and thousands of jobs that would go away, but it would also mean that investors would be out of luck in redeeming any investment capital from a failed investment if the industry were to completely shut down due to federal regulations.
- The Industry Is Still Not Universally Adopted
- Despite the case that the marijuana industry has gained more appeal as far as popular opinion goes, the entire country within the United States has still not legalized the drug on a medical and/or recreational level yet. This makes for a highly fragments industry built around startups. Furthermore, each state has its own set of laws, testing rules, and tax codes that make it not as universal as something like the banking industry, which has a clearly outlined and more universal code of conduct, reporting, and filing system in place
- There Are Still Fake Companies Trying To Get In
- Many of the risks have much to do with the United States cannabis industry but across all countries, the public arena is still seeing its share of fraudulent companies looking to take advantage of industry hype. Because of limited reporting requirements due to the fact that many of these companies list on a lower exchange like the Over The Counter exchange, companies omit reporting certain facts or singularly highlight positive results without reporting the downside outcome of operations. In a case that built from the early days of the legal marijuana industry, for example, the SEC charged a company called Medbox and its founder for "falsely touting "record" revenue numbers to investors and claiming to be a leader in the marijuana industry while some of its earnings came from sham transactions with a secret affiliate."
- The Future Is Unclear Even If Cannabis Is Rescheduled
- Even if marijuana is removed from the Schedule I substance list, it would most likely fall into the oversight of the Food And Drug Administration. This, of course would make for a more controlled industry but it would also, more than likely increase the costs for marijuana producers. Testing, manufacturing, and processing are just a few of the additional costs that could be increased. The FDA would also oversee and control other things like marketing and labeling as well. Long, dawn out clinical testing to show efficacy to treat certain diseases would also be an added cost for the industry.
- "Investor Alert: Marijuana-Related Investments | Investor.gov". www.investor.gov. Retrieved 2018-03-21.
- Wee, Heesun (2016-02-01). "Legal US pot sales soar to $5.4B in 2015". CNBC. Retrieved 2018-03-21.
- Borchardt, Debra. "Marijuana Sales Totaled $6.7 Billion In 2016". Forbes. Retrieved 2018-03-21.
- "The legal marijuana market is exploding — it'll hit almost $10 billion sales in this year". Business Insider. Retrieved 2018-03-21.
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- "Global Medical Marijuana Market Outlook, Trend and Opportunity Analysis". Energias Market Research. 2017-09-27. Retrieved 2018-04-02.
- "Alaska, other states weigh 'sanctuary' status for marijuana businesses". The Seattle Times. 2018-03-06. Retrieved 2018-04-02.
- "List of United States politicians who have acknowledged cannabis use". Wikipedia. 2018-03-25.
- Shandrow, Kim Lachance (2016-09-28). "Exclusive: 5 'Shark Tank' Stars Weigh in on the Marijuana Boom". Entrepreneur. Retrieved 2018-04-03.
- "SEC.gov | SEC Charges Marijuana-Related Company and Executives With Touting Bogus Revenues". www.sec.gov. Retrieved 2018-04-03.
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