In spite of an enormous slowdown in cannabis funding and stock price growth, with lots of the largest players in the space largely under-performing the wider market, investing remains hot. During the last two years, the marijuana industry has seen more 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. And this includes, the subsequent trade around 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 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 on board as advisors.
we make an effort to keep readers up-to-date with the newest news, stock picks, and expert commentary. But, while we continue to get the question about ways to invest in marijuana stocks, we’ve chose to put a quick guide together for you. Before moving forward, it’s essential for readers to know that investing in cannabis will not be limited to growers or retailers.
There are numerous companies providing ancillary services towards the industry, in addition to many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and service/product companies that utilized to operate outside the marijuana industry but have gotten on board since legalization.
The Over-the-Counter Issue – While multiple states in the U.S. have legalized cannabis for either recreational or medical uses, allowing companies to thrive, the plant remains illegal on a Federal level – considered a Schedule I drug through the DEA. It has made it hard for most companies to get on the Nasdaq or the NYSE.
Seeking alternative avenues to boost capital, many organisations go 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 subject to the identical amount of scrutiny that major exchanges and the SEC impose – although those trading in 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, and they also permit a greater degree of latitude regarding the quality of the company that will trade upon 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 method they might gain access to capital; there was clearly somebody which had a publicly traded vehicle that sounded like it zhzvmn become 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 will be avoided at all costs. “There is really a prejudice against inexpensive stocks i think we require to escape being an industry and commence looking towards reverse splitting our stocks, having fewer amounts of shares and better prices since the optics onto it are better,” Bocskor voiced.