Despite a tremendous slowdown in cannabis funding and stock price growth, with most of the largest players in the space largely under-performing the wider market, investing remains hot. In the last a couple of years, the marijuana industry has seen more than $26 billion in funding deals and M&A.
Beyond the figures, marijuana-related companies have really reached the mainstream, with several big ETFs trading on major stock exchanges. And this includes, the subsequent trade around the NYSE: the ETFMG Alternative Harvest ETF (NYSE: MJ), the AdvisorShares Pure Cannabis ETF (NYSE: YOLO), the Cannabis ETF (NYSE: THCX), and the Amplify Seymour Cannabis ETF (NYSE: CNBS).
Further evidencing the mainstreaming of cannabis are companies like weed grower Cronos Group Inc. (NASDAQ: CRON) and cannabinoid-based biotech GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH) listing in the Nasdaq, Canopy Growth (NYSE: CGC) trading on the NYSE, and Acreage Holdings (OTC: ACRZF) pursuing Super Bowl ads and having political big guns like John Boehner and Bill Weld aboard as advisors.
we make an effort to keep readers up to date with the most recent news, stock picks, and expert commentary. But, since we continue to get the question about the best way to invest in marijuana stocks, we’ve chose to put a quick guide together for you. Before moving forward, it’s essential for readers to comprehend that making an investment in cannabis is not really confined to growers or retailers.
There are several companies providing ancillary services to the industry, in addition to many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and service/product companies that used to operate away from marijuana industry but have gotten on board since legalization.
The Over-the-Counter Issue – While multiple states within the U.S. have legalized cannabis for either recreational or medical uses, allowing companies to thrive, the plant is still illegal over a Federal level – considered a Schedule I drug through the DEA. It has made it hard for most companies to have listed on the Nasdaq or the NYSE.
Seeking alternative avenues to increase capital, many businesses go public in Canadian exchanges, while others did so by trading on over-the-counter U.S. exchanges. Because of this many publicly traded cannabis companies usually are not subjected to exactly the same degree of scrutiny that major exchanges and also the SEC impose – although those trading around the TSX and CSE are subjected to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously as the bigger exchanges, plus they allow for a greater level of latitude with regards to the expertise of the company which will trade to them. Consequently, many of the companies (…) that have something connected with cannabis probably shouldn’t be there. They got there because entrepreneurs think it is the only way they might obtain access to capital; there was clearly somebody who had a publicly traded vehicle that seemed like it zhzvmn become a good fit,” Leslie Bocskor, investment banker and President of cannabis advisory firm Electrum Partners, told Benzinga.
Having said this, he added that not every OTC or penny stock will be avoided at all costs. “There is really a prejudice against inexpensive stocks i think we need to get away from as an industry and commence looking towards reverse splitting our stocks, having fewer numbers of shares and better prices because the optics onto it are better,” Bocskor voiced.