Investing in Cannabis Stocks
The effects of an explosive industry are fundamentally felt within the financial world. Cannabis is a perfect example of this: today, cannabis stocks are a wildly popular topic. Between March 1, 2021 and May 28, 2021, the term “cannabis stocks” was Googled thousands of times in the United States alone. Here is a look into the world of investing in cannabis companies, as well as some of the available options. Please note, the information contained herein about the top cannabis stocks should not be considered investment advice.
Understanding Cannabis Stocks
The first thing to understand is there are three predominant categories that comprise herb stocks. The first is herb-focused biotechs, which are pharmaceutical companies that develop cannabinoid-based pharmaceutical drugs. Companies that sell ancillary products and services to flower farmers, such as lighting systems and hydroponics make up the second category. The final group comprises the growers and retailers themselves who cultivate, package and distribute products directly to customers. Keep in mind herb stocks are designated as over-the-counter (OTC) stocks. These types of stocks are not required to submit consistent financial statements, therefore accurate risk assessments are impossible.
Next, know the difference between individual stocks of a single company versus exchange-traded funds (ETF), which are a type of security that tracks an index, sector, commodity or another asset. While considering, take into account supply and demand imbalances. In Canada, when demand surged and production increased, investors were left unhappy when the tide turned and overstock began to exceed demand. Further, contemplate including both public and private companies when investing. Each sector boasts its own set of strengths and weaknesses, therefore a balanced portfolio is most likely to be beneficial. Then, determine if penny stocks are an option. Penny stocks are any securities trading under the $5 price point. These are high-risk high-reward. At the start of 2021, cannabis penny stocks saw the most upside in the market.
Finally, research, research, research after selecting a handful of companies. Learn each business’s ultimate principles and goals, inspect SEC filings and review financial sites, including The North American Marijuana Index, which tracks the leading stocks operating in the legal cannabis industry in the United States and Canada without endorsement or recommendation for any specific company. Note, here the term ‘marijuana’ includes all forms and applications of the marijuana or cannabis plant, including hemp and derivatives of the plant, but does not include synthetic cannabinoids.
Impacts on the Cannabis Industry
Additionally, world events can affect the cannabis industry, and its associated stocks, in both positive and negative ways. For example, COVID-19 boosted sales as it was deemed an essential business and users flocked for delivery services but the pandemic also hindered profits when high volume cannabis tourism sites shuttered due to quarantine. Another aspect to be aware of is impactful changes like IRS code relevance, such as the removal of Section 280E (the banning of the use of standard business deductions by any company which traffics in federally controlled substances) of the Internal Revenue Code to the legal cannabis industry. Federal legalization within the United States could shift the market as well.
After considering the above information, the next step is to choose where to invest. While opinions can be found everywhere, these options are considered top cannabis stocks as of May 31, 2021. Their order is not to be considered a ranking; duplicates have been removed.
Per The Motley Fool:
- Curaleaf Holdings, Inc. (OTC:CURLF), Massachusetts
- Trulieve Cannabis Corp. (OTC:TCNNF), Florida
- Innovative Industrial Properties, Inc. (NYSE: IIPR), California
- The Scotts Miracle-Gro Company (NYSE: SMG), Ohio
- OrganiGram Holdings Inc. (NASDAQ: OGI), Canada
- TILT Holdings Inc. (OTC: TLLTF), Arizona
- MedMen Enterprises Inc. (OTC: MMNFF), Canada
Per Market Beat:
- 22nd Century Group, Inc. (NYSEAMERICAN:XXII), New York
- Cannabis Sativa, Inc. (OTCMKTS:CBDS), Nevada
- Cannabis Science, Inc. (OTCMKTS:CBIS), California
- Canopy Growth Corporation (TSE:WEED), Canada
- GrowGeneration Corp. (NASDAQ:GRWG), Colorado
- KushCo Holdings, Inc. (OTCMKTS:KSHB), California
- Marijuana Company of America, Inc. (OTCMKTS:MCOA), California
- Medical Marijuana, Inc. (OTCMKTS:MJNA), California
- Terra Tech Corp. (OTCMKTS:TRTC), California
- United Cannabis Corporation (OTCMKTS:CNAB), Colorado
- Akerna Corp. (NASDAQ:KERN, Colorado
- Aurora Cannabis Inc. (NASDAQ:ACB), Canada
- Cara Therapeutics, Inc. (NASDAQ:CARA), Connecticut
- Coffee Holding Co., Inc. (NASDAQ:JVA), New York
- Evogene Ltd. (NASDAQ:EVGN), Israel
- Greenlane Holdings, Inc. (NASDAQ:GNLN), Florida
- HEXO Corp. (NYSE:HEXO), Canada
- Neptune Wellness Solutions Inc. (NASDAQ:NEPT), Canada
- Power REIT (NYSE:PW), New York
- Village Farms International, Inc. (NASDAQ:VFF), Canada
Intrigued? Visit with a professional financial advisor to consider investing in cannabis stocks. Supporting the industry from the inside? Protect your investment with the help of FreshStor, makers of the world’s smartest cannabis curing and storage container, CVault, as well as the new, upgraded EVault for distillates, isolates, oils and powders. Let science and stainless steel protect and secure your consumables in the best way possible!