Despite an enormous slowdown in cannabis funding and stock price growth, with lots of the largest players within the space largely under-performing the wider market, investing remains hot. Within the last a couple of years, the marijuana industry has seen greater 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. One of them, these trade in the NYSE: the ETFMG Alternative Harvest ETF (NYSE: MJ), the AdvisorShares Pure Cannabis ETF (NYSE: YOLO), the Cannabis ETF (NYSE: THCX), and also the Amplify Seymour Cannabis ETF (NYSE: CNBS).
Further evidencing the mainstreaming of cannabis are brands like weed grower Cronos Group Inc. (NASDAQ: CRON) and cannabinoid-based biotech GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH) listing around the Nasdaq, Canopy Growth (NYSE: CGC) trading in the NYSE, and Acreage Holdings (OTC: ACRZF) going after Super Bowl ads and getting political big guns like John Boehner and Bill Weld aboard as advisors.
we attempt to keep readers up-to-date with the latest news, stock picks, and expert commentary. But, as we continue to get the question about the best way to put money into marijuana stocks, we’ve made a decision to put a brief guide together for you personally. Before moving forward, it’s important for readers to know that investing in cannabis is not confined to growers or retailers.
There are many companies providing ancillary services towards the industry, as well as many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and service/product suppliers that employed to operate away from marijuana industry but have gotten aboard 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 remains illegal on the Federal level – classified as a Schedule I drug through the DEA. It has managed to make it challenging for many businesses to get listed on the Nasdaq or the NYSE.
Seeking alternative avenues to increase capital, many organisations go public in Canadian exchanges, and some did so by trading on over-the-counter U.S. exchanges. This means that many publicly traded cannabis companies are certainly not subject to the same amount of scrutiny that major exchanges and the SEC impose – although those trading in the TSX and CSE are susceptible to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously as the bigger exchanges, and they also enable a better degree of latitude with regards to the quality of the company that can trade upon them. Consequently, lots 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 that had a publicly traded vehicle that sounded like it zhzvmn be a good fit,” Leslie Bocskor, investment banker and President of cannabis advisory firm Electrum Partners, told Benzinga.
Having said this, he added that does not every OTC or penny stock is to be avoided at all costs. “There is actually a prejudice against inexpensive stocks which i think we require to get away from being an industry and start looking towards reverse splitting our stocks, having fewer amounts of shares and better prices since the optics onto it are better,” Bocskor voiced.