In spite of a tremendous 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 two years, the marijuana industry has seen greater than $26 billion in funding deals and M&A.
Past the figures, marijuana-related companies have really reached the mainstream, with several big ETFs trading on major stock exchanges. Among them, the subsequent trade in 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) going after Super Bowl ads and obtaining political big guns like John Boehner and Bill Weld aboard as advisors.
we strive to keep readers up to date with the newest news, stock picks, and expert commentary. But, while we continue to have the question about ways to invest in marijuana stocks, we’ve made a decision to put a short guide together to suit your needs. Before moving on, it’s necessary for readers to comprehend that investing in cannabis will not be restricted to growers or retailers.
There are many 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 suppliers that employed to operate away from marijuana industry but have gotten aboard since legalization.
The Over-the-Counter Issue – While multiple states inside 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 – classified as a Schedule I drug from the DEA. This has made it hard for a lot of companies to have listed on the Nasdaq or even the NYSE.
Seeking alternative avenues to boost capital, many businesses go public in Canadian exchanges, while others have performed so by trading on over-the-counter U.S. exchanges. Because of this many publicly traded cannabis companies are not susceptible to the identical amount of scrutiny that major exchanges and also the SEC impose – although those trading on 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 permit a greater level of latitude with regards to the quality of the company that can trade on them. As a result, many of the companies (…) which 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 seemed 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 which not every OTC or penny stock is to be avoided at all costs. “There is really a prejudice against inexpensive stocks that I think we require to get away from being an industry and start looking towards reverse splitting our stocks, having fewer quantities of shares and better prices as the optics into it are better,” Bocskor voiced.