Should You Invest in Cannabis? – Top Stocks & What You Need to Know
New Frontier Data, a cannabis research firm, expects total legal sales of cannabis to approach $30 billion in the 11 U.S. jurisdictions where the substance was legal as of late 2019 – a 14% annualized growth rate, reports Forbes.
Wall Street is taking notice. The initial public offering market is brisk for businesses devoted to the cultivation, processing, and sale of cannabis and cannabis derivatives. Multiple exchange-traded funds (ETFs) promise exposure to the legal cannabis market, some exclusively. Though differences in opinion abound and enthusiasm isn’t uniform, market analysts are largely bullish on the sector. Should retail investors follow? That depends.
Wall Street is taking notice. The initial public offering market is brisk for businesses devoted to the cultivation, processing, and sale of cannabis and cannabis derivatives. Multiple exchange-traded funds (ETFs) promise exposure to the legal cannabis market, some exclusively. Though differences in opinion abound and enthusiasm isn’t uniform, market analysts are largely bullish on the sector.
The Bull Case for Cannabis
Cannabis is one of the planet’s most popular and durable mind-altering substances.
Recreational and medicinal users have enjoyed cannabis for millennia. Circumstantial evidence dates cannabis use back some 5,000 years, according to a 2017 study published in the journal Pharmacy and Therapeutics. There’s direct evidence of medicinal use dating back to 400 C.E. In modern times, the fortunes of the global trade in illicit cannabis rose in the mid to late 20th century as cultural tolerance of its consumption grew. Among younger users, use peaked in the late 1970s, declined in the 1980s, and rose from the 1990s onward, according to the 2017 research publication “The Health Effects of Cannabis and Cannabinoids” by the Committee on the Health Effects of Marijuana.
- Canopy Growth Corp. (CGC). Canopy Growth was a first mover in Canada’s legal cannabis cultivation market. Today, it’s widely viewed by industry analysts as the preeminent player in the Great White North – the world’s largest national market for legal cannabis.
- iAnthus Capital Holdings (IAN). iAnthus Capital Holdings is a speculative play on large-scale cannabis cultivation in the United States. The firm has designs on a massive, state-of-the-art cultivation facility in Florida, where recreational cannabis is not yet legal. The upside: iAnthus has more credibility than the average cannabis startup, which translates to enthusiastic support from deep-pocketed institutional investors.
- Aurora Cannabis (ACN). Aurora Cannabis is a Vancouver-based marijuana distributor with medicinal and recreational divisions. Its medicinal operations span nearly two-dozen countries, making it one of the farthest-reaching companies in the business today.
- Aphria (APHA). Aphria is a global cannabis grower and distributor with eco-friendly bona fides and exposure to at least 10 national markets. Founded in 2013, it’s a veritable dinosaur in the fast-moving cannabis industry.
- Tilray (TLRY). Tilray is a global grower and distributor focusing primarily on the medicinal market. Its decision to avoid recreational cannabis for now may resonate with risk-averse investors, though it’s not as if Tilray lacks for competition.