In spite of a massive slowdown in cannabis funding and stock price growth, with most of the largest players in the space largely under-performing the wider market, investing remains hot. Within 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. One of them, these trade on the NYSE: the ETFMG Alternative Harvest ETF (NYSE: MJ), the AdvisorShares Pure Cannabis ETF (NYSE: YOLO), the Cannabis ETF (NYSE: THCX), and the Amplify Seymour Cannabis ETF (NYSE: CNBS).
Further evidencing the mainstreaming of cannabis are companies 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) pursuing Super Bowl ads and having political big guns like John Boehner and Bill Weld aboard as advisors.
we make an effort to keep readers up-to-date with the most recent news, stock picks, and expert commentary. But, while we continue to obtain the question about ways to invest in marijuana stocks, we’ve decided to put a brief guide together for you. Before moving on, it’s necessary for readers to understand that purchasing cannabis is not restricted to growers or retailers.
There are several companies providing ancillary services towards the industry, along with many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and repair/product companies that used to operate outside the marijuana industry but have gotten aboard 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 is still illegal over a Federal level – considered a Schedule I drug by the DEA. It has caused it to be challenging for a lot of companies to get listed on the Nasdaq or perhaps the NYSE.
Seeking alternative avenues to boost capital, many companies have gone public in Canadian exchanges, while others did so by trading on over-the-counter U.S. exchanges. Which means that many publicly traded cannabis companies are certainly not subjected to the same amount of scrutiny that major exchanges and the SEC impose – although those trading in the TSX and CSE are susceptible to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously as the bigger exchanges, plus they permit a larger amount of latitude regarding 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 think it is the only way they might obtain access to capital; there was somebody that had a publicly traded vehicle that seemed like it zhzvmn be 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 is going to be avoided no matter what. “There is a prejudice against cheap stocks i think we must have to get away from being an industry and begin looking towards reverse splitting our stocks, having fewer numbers of shares and better prices since the optics onto it are better,” Bocskor voiced.