Investing in Marijuana

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Investing in Marijuana

As the business world becomes less rigid about Cannabis (Marijuana/Ganja), organisations and countries alike are investing in the herb that has both medical, and recreation uses.

When states and countries legalise cannabis, new businesses appear out of nowhere. California legalised recreational marijuana at the very beginning of 2018. Within two weeks, two dozen Los Angeles businesses got approval to sell recreational products.

Gives a whole new meaning to the phase, “growing like a weed”. It’s a growing industry, and people are starting to see that there’s money to be made here.

So where does that leave you, the investor?

Well, you have many options. Both directly and indirectly, there are many ways you can turn cannabis into one of the more intriguing investments in your portfolio.

Cannabis Companies

Cannabis stocks are such a new and unusual investment that even compared to your usual investments; there’s no such thing as a “safe bet.” But should you choose to take a chance, medical marijuana presents you with more options. Far more states have legalised for medical use than recreational, and Canada has had medical weed for nearly two decades.

Jamaica is playing catch up with decriminalising marijuana and allowing businesses such Medicanja and Lasco Pharmaceuticals the leeway to explore. What is disheartening is that Jamaica should have been leading the charge with investing in marijuana as much as bauxite and tourism. While no company has been listed on the Jamaica Stock Exchange as yet, we do expect to see a few soon, however, there are companies with direct or indirect exposure to marijuana on the major stock exchanges both in the U.S. and Canada – for example, GW Pharmaceuticals, whose CBD-based epilepsy drug Epidiolex was recently approved by the U.S. Food & Drug Administration (FDA).

Some Canadian companies have shown themselves to be intriguing players in the market. OrganiGram (OGRMF), a licensed producer and grower of medical marijuana, is coming off a strong Q2. As the number of medical cannabis patients in the country grows, so have OrganiGram’s sales, in no small part due to their production of cannabis oil.

Canopy Growth Corporation (TWMJF) is another popular option, a Canadian company that not only produces but researches and studies cannabis. It was recently valued at around $4.35 billion, and Bank of Montreal helps finance it, giving it a competitive advantage.

The first cannabis company to trade on a major U.S. exchange was a Canadian company, Cronos Group Inc. (CRON), which trades on the NASDAQ. What has drawn some people toward it is what has scared others away: volatility. Its overall decline this year hasn’t stopped it from having random days of jumping up 14%. Another Canadian company, Canopy Growth Corp. (CGC), recently began trading on NYSE.

Medicinal cannabis companies will undoubtedly benefit from the new customers, but it would also require more expenses to keep up with demand. That’s important to remember; there’s money to be made, but there’s money that must be spent too. Not every weed stock is going to spit out profits just because it gets legalised.

Some companies, though, have been preparing for the event where recreational marijuana is legal and distribution needs to expand, and they may be worth looking into. Scott’s Miracle-Gro, Co. has acquired multiple companies over the years like General Hydroponics and Sunlight Supply – producers of cannabis growing supplies.

Cannabis ETFs

As marijuana stocks become more of a common occurrence, so do marijuana exchange-traded funds (ETF). ETFs allow for trading many different securities in one fund, bringing a diverse portfolio. They’re tempting, but they are also even newer than cannabis stocks. Moreover, if banks are still wary of individual cannabis stocks, they’re going to be wary of a fund with multiple.

So stay cautious.

Horizons ETFs has a cannabis fund, Horizons Marijuana Life Sciences ETF (HMMJ) is a popular choice that trades previously mentioned companies like Aurora and Canopy Growth. ETFMG Alternative Harvest ETF (MJ) is a fund that focuses exclusively on pot stocks, while the newer Evolve Marijuana ETF (TSX: SEED) is almost entirely Canadian stocks, trading on the Toronto Stock Exchange.

Marijuana stocks are more volatile than your average stock, and the legality of cannabis is always hard to define precisely. It’s a changing world for marijuana, and how you think it will continue to change will determine whether or not you want to invest.


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