Despite an enormous 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. In the last 2 yrs, the marijuana industry has seen greater than $26 billion in funding deals and M&A.
Beyond the figures, marijuana-related companies have really reached the mainstream, with several big ETFs trading on major stock exchanges. One of them, these trade in the NYSE: the ETFMG Alternative Harvest ETF (NYSE: MJ), the AdvisorShares Pure Cannabis ETF (NYSE: YOLO), the Cannabis ETF (NYSE: THCX), as well as 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 on 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 strive to keep readers current with the newest news, stock picks, and expert commentary. But, as we continue to get the question about ways to spend money on marijuana stocks, we’ve chose to put a quick guide together to suit your needs. Before moving forward, it’s essential for readers to comprehend that purchasing cannabis is not really confined to growers or retailers.
There are several companies providing ancillary services to the industry, in addition to 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 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 continues to be illegal on the Federal level – considered a Schedule I drug from the DEA. This has caused it to be hard for most companies to obtain on the Nasdaq or even the NYSE.
Seeking alternative avenues to raise capital, many companies have gone public in Canadian exchanges, and some did so by trading on over-the-counter U.S. exchanges. This means that many publicly traded cannabis companies usually are not subjected to the identical level of scrutiny that major exchanges and also the SEC impose – although those trading around the TSX and CSE are susceptible to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously because the bigger exchanges, and they also permit a larger level of latitude in terms of the quality of the company that can trade upon them. Because of this, most of the companies (…) that have something connected with cannabis probably shouldn’t be there. They got there because entrepreneurs think it is the only way they can gain access to capital; there is somebody who had a publicly traded vehicle that seemed 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 does not every OTC or penny stock is going to be avoided without exception. “There is a prejudice against cheap stocks which i think we require to escape as being an industry and commence looking towards reverse splitting our stocks, having fewer quantities of shares and higher prices as the optics onto it are better,” Bocskor voiced.