In spite of an enormous slowdown in cannabis funding and stock price growth, with many of the largest players within the space largely under-performing the wider market, investing remains hot. During the last two 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. And this includes, 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 businesses 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 on 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 make an effort to keep readers current with the newest news, stock picks, and expert commentary. But, since we continue to obtain the question about the best way to invest in marijuana stocks, we’ve chose to put a brief guide together for you. Before moving forward, it’s essential for readers to know that purchasing cannabis will not be confined to growers or retailers.
There are many companies providing ancillary services towards the industry, along with many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and service/product companies that employed to operate outside the 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 continues to be illegal on the Federal level – considered a Schedule I drug through the DEA. It has made it difficult for many businesses to get listed on the Nasdaq or even the NYSE.
Seeking alternative avenues to increase capital, many businesses have gone public in Canadian exchanges, while some did so by trading on over-the-counter U.S. exchanges. This means that many publicly traded cannabis companies are not subject to exactly the same degree of scrutiny that major exchanges and 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 permit a larger level of latitude regarding the expertise of the company that will trade to them. Consequently, lots of the companies (…) which have something related to cannabis probably shouldn’t be there. They got there because entrepreneurs thought it was the only way they could get access to capital; there is somebody which had a publicly traded vehicle that sounded like it zhzvmn be considered 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 low priced stocks which i think we must have 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 onto it are better,” Bocskor voiced.