In spite of a massive 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 2 yrs, the marijuana industry has seen a lot 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. Among them, 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 on 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 attempt to keep readers current with the newest news, stock picks, and expert commentary. But, while we continue to get the question about ways to put money into marijuana stocks, we’ve decided to put a short guide together to suit your needs. Before moving on, it’s important for readers to know that investing in cannabis is not confined to growers or retailers.
There are many companies providing ancillary services for the industry, in addition to many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and service/product suppliers that utilized 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 remains illegal on the Federal level – considered a Schedule I drug by the DEA. It has caused it to be challenging for many businesses to obtain listed on the Nasdaq or perhaps the NYSE.
Seeking alternative avenues to increase capital, many organisations have gone public in Canadian exchanges, while others have performed so by trading on over-the-counter U.S. exchanges. This means that many publicly traded cannabis companies are not susceptible to exactly the same degree of scrutiny that major exchanges and the SEC impose – although those trading on the TSX and CSE are susceptible to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously since the bigger exchanges, and they also allow for a larger degree of latitude with regards to the expertise of the company that will trade upon them. Because of this, many of the companies (…) which have something to do with cannabis probably shouldn’t be there. They got there because entrepreneurs thought it was the only way they can gain access to capital; there was clearly somebody that 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 which not every OTC or penny stock is to be avoided no matter what. “There is really a prejudice against cheap stocks that I think we need to get away from as an industry and begin looking towards reverse splitting our stocks, having fewer quantities of shares and higher prices as the optics onto it are better,” Bocskor voiced.