Despite a massive slowdown in cannabis funding and stock price growth, with lots of the largest players within the space largely under-performing the wider market, trading 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. Among them, the following 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 around 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 make an effort to keep readers up-to-date with the most recent news, stock picks, and expert commentary. But, since we continue to have the question about ways to invest in marijuana stocks, we’ve made a decision to put a brief guide together to suit your needs. Before moving forward, it’s essential for readers to know that making an investment in cannabis will not be confined to growers or retailers.
There are many companies providing ancillary services for the industry, as well as many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and service/product providers that utilized to operate outside of the 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 continues to be illegal on the Federal level – classified as a Schedule I drug through the DEA. This has made it hard for a lot of companies to obtain listed on the Nasdaq or even the NYSE.
Seeking alternative avenues to increase capital, many businesses have gone public in Canadian exchanges, and some have done so by trading on over-the-counter U.S. exchanges. Which means that many publicly traded cannabis companies are not subjected to exactly the same degree of scrutiny that major exchanges as well as the SEC impose – although those trading on the TSX and CSE are subject to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously since the bigger exchanges, plus they enable a greater amount of latitude in terms of the expertise of the company which will trade to them. As a result, many of the companies (…) who have something to do with cannabis probably shouldn’t be there. They got there because entrepreneurs think it is the only way they can obtain access to capital; there was somebody which had a publicly traded vehicle that appeared 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 not every OTC or penny stock is going to be avoided without exception. “There is a prejudice against cheap stocks that I think we must have to escape being an industry and start looking towards reverse splitting our stocks, having fewer amounts of shares and better prices since the optics into it are better,” Bocskor voiced.