Legal or not, weed makes money. Thankfully, that money is more often being generated through legitimate means. Though federally illegal in the United States, cannabis has been legalized for either recreational or medicinal use in 29 states plus the District of Columbia. In 2014, Uruguay became the first country to legalize cannabis at the national level, and Canada is following suit, with federally legalized cannabis sales to launch in July 2018. Mexico and Germany have just legalized cannabis for medicinal use, confirming that the worldwide trend toward legalization is not slowing down.
Given cannabis’ versatility—it can be used as medicine, recreation, and an ingredient in an array of industrial products, the world’s revitalized love for pot means money and lots of it. ArcView Market Research Group projects that the cannabis industry will generate up to $21.6 billion in revenue by 2021. These numbers have caught the attention of investors who don’t want to miss the green rush.
How to Invest in Cannabis Stocks
Although cannabis business is profitable, it’s not easy or safe. In the United States, the legal dissonance between federal and state laws puts most banking and insurance options out of reach for cannabis entrepreneurs. The Federal Government supersedes the states—the only protection the cannabis industry has from the full weight of the law is a document released by the DOJ Deputy Attorney General under the Obama administration, James Cole, in 2013.
That memo issued guidance to the DOJ on how to enforce federal prohibition of cannabis considering the numerous states that had legalized the plant
While not law, the Cole Memo states that the DOJ will not pursue state-licensed entities conforming to their states’ regulations. All it takes to change that guidance is another memo designating all cannabis endeavors as high priorities for federal prosecution. These obstacles give “risk assessment” a whole new meaning for investors looking to get green.
But in this industry, sometimes playing it safe is also the most lucrative option. For example, investing in ancillary businesses, or businesses that don’t deal directly with cannabis but provide products and services to those that do, face much less risk while remaining essential to the industry’s success. The Scott’s Miracle Grow Company, for example, is a name recognized by the prohibitionist and the cannabis consumer alike for its provision of cultivation products. Though the company was around long before pot’s comeback, it has benefited tremendously from it.
Another safe but controversial avenue for investors looking to enter the cannabis industry is through mainstream bio-pharmaceutical companies using cannabis derivatives as main ingredients in their drug therapies. Given the pharmaceutical industry’s clout, it’s unlikely that these businesses will face pushback from the feds. In fact, during the 2016 election cycle, the pharmaceutical company Insys was simultaneously able to fund successful anti-cannabis campaigns in Arizona (the state was the only of nine to lose its cannabis ballot initiative) and obtain approval from the DEA to launch a synthetic cannabinoid drug.
The Top 10 Cannabis Stocks in North America
The North American Marijuana Index is comprised of the most successful cannabis stocks in the United States and Canada. The stocks that currently make up the index maintain a minimum market capitalization of $30 million, a daily trading volume of $600,000, and a stock price of at least ten cents, OR they accumulate a revenue of at least $5 million annually. The following are the ten largest of these stocks.
In light of Canada’s progressive cannabis legislation, it should come as no surprise that most of these companies are Canadian
Medical cannabis was regulated in 2001, and the Canadian legislature has passed a bill authorizing the commercialization of cannabis beginning in July 2018.
Canopy Growth Corporation (WEED:CA), Market Cap: $3.72 billion
This $3.72 billion Canadian cultivation company provides some of the leading cannabis brands with their bud. The company is comprised of three brands: Tweed Farms, Spectrum Cannabis, and Bedrocan Canada. Tweed Farms is the largest cannabis greenhouse in the world. Spectrum is Canopy Growth’s patient-facing brand in Canadian and international medical markets. Bedrocan supplies standardized, medical-grade cannabis to the medical market as well as for clinical research.
GW Pharmaceuticals Plc. (GWPH), Market Cap: $2.83 billion
This pharmaceutical company is known for its development of cannabinoid derived drug therapies. Its current lead product, Epidiolex, is designed to treat drug-resistant forms of epilepsy.
Aurora Cannabis Inc. (ACB:CA), Market Cap: $1.52 billion
Another Canadian grow company, Aurora cultivates and sells lab-tested medical marijuana.
MedReleaf Corp. (LEAF:CA), Market Cap: $1.42 billion
This Canadian medical-grade cannabis grow company is R&D driven and provides patients with strains sourced from around the world.
Aphria Inc. (APH:CA), Market Cap: $1.25 billion
Formerly CHT Medical, this company uses greenhouse grown cannabis to produce cannabis capsules, oral solutions, and THC and CBD vaporizers.
CannTrust Holdings Inc. (TRST:CNX), Market Cap: $543.76 million
This science driven Canadian company provides lab-tested medical-grade cannabis.
Cronos Group Inc. (MJN:CA), Market Cap: $474.45 million
Cronos owns several brands within the medical cannabis industry including Peace Naturals, Original BC, and Whistler Medical Marijuana Company, brands licensed to cultivate and sell medical marijuana.
Axim Biotechnologies Inc. (AXIM), Market Cap: $334.34 million
This biotech company researches and develops pharmaceutical, nutraceutical, and cosmetic products using cannabinoid derivatives.
CanniMed Therapeutics Inc. (CMED:CA), Market Cap: $306.28 million
From 2000-2013, CanniMed’s parent company, Prairie Plant Systems, was the sole provider of medical cannabis to Health Canada. Today, CanniMed continues to supply medical grade cannabis to patients in addition to conducting research into the efficacy of medical cannabis.
Supreme Pharmaceuticals Inc. (FIRE:CA), Market Cap: $275.96 million
Supreme is a Canadian company that partners with cannabis brands. As of today, Supreme established 7ACRES, a federally licensed grow facility that will provide cannabis for the Canadian commercial sector.