5 Marijuana Stocks to Watch in 2018
It’s no secret that the legalization of marijuana for medicinal and/or recreational uses in additional states has led to some very positive growth in the industry. In fact, stats show that the marijuana industry will be worth $21. 8 billion by the year 2020, with the U.S. cannabis market already claiming a stake of $6.7 billion in that growth, while the Canadian industry sits at $8 billion so far.
Basically, the cannabis industry is off to a really good start, and if the current figures are anything to go by, it has the potential to take off really. So, if you’re looking to make an investment in the marijuana sector, then look for these following marijuana stocks.
Top Marijuanas Stocks 2018
Canada is set to become the first country in the world to have a large-scale cannabis sector that is federally regulated, and that alone has stimulated the emergence of fast-growing start-ups like Cannabis Wheaton.
What sets Cannabis Wheaton apart is the fact that they assist growers with the capital they need to scale their operations.
In exchange, Cannabis Wheaton gets a minority equity stake in the companies they assist, as well as a percentage of sales from all the cannabis that the companies harvest and sell.
So far, Cannabis Wheaton has provided capital to 39 cannabis clinics around the country, effectively serving more than 30,000 patients.
Since the cigarette industry is all but going up in smoke, it comes as no surprise that tobacco giants would want to move into the rapidly growing marijuana industry.
Phillip Morris is leading the charge in this regard, as the company made a lucrative deal with Syqe Medical, committing to a $20 million capital investment to facilitate in the growth of this Israeli cannabis start-up.
Not only that, but Phillip Morris also went ahead and purchased a GMO plant patent, which can be utilized in the cannabis market.
Major pharmaceutical, AbbieVie Inc. was one of the earliest adopters in the cannabis industry. The company got a foot in the door with Marinol, a marijuana-based drug that helps AIDS patients to regain their appetite, while alleviating chemotherapy side-effects like nausea and vomiting.
Since launching the drug, AbbieVie Inc. has seen an exponential increase in its revenue and working income, while their dividend sits at a healthy 3.8%.
The only downside to investing in AbbieVie Inc. stock is the fact that the company is mainly focused on the U.S., and as an investor, this means that if anything negative happens to the U.S. domestic market, then your stock will suffer as a result.
Pharmaceutical giant GW Pharmaceuticals is also staking its place in the cannabis market, with the creation of several cannabis-based products aimed at treating ailments like autism, schizophrenia, epilepsy and even infantile spasms.
However, GWP is mostly known for its latest creation, a marijuana-based experimental drug called Epidiolex which has been approved by the FDA to treat epileptic patients. Apparently, the FDA has found that the drug has the potential to provide immense benefit to patients while offering minimal risk.
GWP is looking to rake in upwards of $500 million worth of sales from the drug, while Epidiolex itself is set to blaze the trail for similar drugs in the industry.
However, the best part about investing in GWP is the fact that the company is backed by a $3 billion value, and that coupled with the solid track record it has is a rarity in the pharmaceutical industry. Moreover, GWP is planning on pumping in an additional investment of 50 million pounds into its UK-based facilities, which will lead to the creation of 70 new jobs in the region.
Cronos Group Inc.
The Cronos Group Inc. is one of the biggest players in the cannabis industry, with a market cap of $1. 042 billion, as well as multiple production and distribution facilities that are located in places like Australia, Germany, Canada, and Israel.
Not only that, but the Cronos Group Inc. is a Nasdaq listed company and their shares bumped up 20% at the beginning of 2018.
Which States Allow Marijuana Investments?
For 78 long years, the U.S. government has kept strict prohibition laws against marijuana use. However, recent years have seen significant pushback from the public to legalize this substance for medicinal as well as recreational purposes. This is in stark contrast to how marijuana was perceived not too long ago when just 12% of Americans voted in support of marijuana legalization in the year 1969.
The good news is that recent state ballots show strong public support for the legalization of marijuana, which can only mean good things for the industry.
Not ones to be left behind, hedge funds, angel investors and private equity firms have all started to align themselves in one way or another with the marijuana industry, and with a reported market cap of $3 billion in April 2015, any savvy investor would want to think seriously about investing in cannabis. Moreover, according to cannabis market research firms in the U.S., the marijuana industry market cap is expected to reach anything from $15.2 billion to $35 billion by the year 2020.
On the other hand, you have 50 publicly traded companies that are connected to the cannabis industry, while investors are given an opportunity to purchase and own over-the-counter or public market stocks. And you can even get in on the action through penny stocks as well.
For those who are interested in direct investment, there’s an opportunity to invest in smaller private companies that are connected to the cannabis sector in one way or another, while supporting cannabis start-ups through crowd-funding projects that yield long-term returns. The latter option is an ideal solution for investors who don’t currently reside in states where the drug has been legalized.
Currently, only 23 states have legalized marijuana for medicinal purposes, while only the District of Colombia and four states have legalized it for recreational use. Additionally, 11 states are currently carrying out initiatives to lobby for legalization, and the following report shows which states have legalized the drug for recreational use, as well as the locations which have been attracting the most investor interest.
Decentralizing Marijuana Enforcement
The U.S. federal law book classifies marijuana as a Schedule 1 drug, which means that it is effectively still considered to be illegal. The good news is that these federal laws have no significant bearing on individual states, which are allowed to legalize the drug at their own discretion.
That said, the Department of Justice has provided some form of regulation through the “Cole Memo” document which separates marijuana enforcement into 8 different priorities. This includes prohibiting the distribution of marijuana outside of the state where it is legalized, keeping track of marijuana sales by gangs and cartels, and preventing the sale of marijuana to minors.
States Where Recreational Marijuana is Legal
If you’re wondering which four states have legalized marijuana for recreation purposes, here they are:
The state of Colorado was one of the first to legalize marijuana for recreational use in November 2012 using the 64th Amendment. Since then, the legalized cannabis market in Colorado has grown to reach $1 billion in sales to date, and this includes for recreational and medicinal purposes.
In fact, Colorado has been able to realize $70 million in yearly cannabis taxes, which is more than what the state made from alcohol taxes, as they only amounted to about $42 million in the year 2016. On the flip side, research shows that establishing a cannabis business in Colorado is still very difficult, which is something that investors should be aware of.
The November 2012 election marked a significant milestone for the state of Washington, as voters were able to legalize cannabis through Initiative 502 (I-502), wherein 56% voted in favor and 44% against. Obviously, that 56% were on to something, as the cannabis industry has attracted a lot of investment into the state, making it the second largest legal marijuana market in the country as a whole. In fact, the state of Washington was able to generate just over $250 million in yearly taxes from the marijuana industry, which is a much larger figure than the $36 million that the state initially predicted it would get from the industry.
Using Measure 2 as a baseline, Alaskan voters were able to legalize marijuana for recreational use during the November 2014 election period. As a result, Alaskans are allowed to grow up to 24 different marijuana plants either individually or commercially by obtaining a license, and you can have up to one ounce of marijuana on you and not get into trouble. The projected tax revenue from the sale of marijuana in Alaska is set to reach a projected $19 million.
Similar to Alaska, the state of Oregon legalized marijuana for recreational use during the November 2014 election period, using Measure 91 as a benchmark. Now, Oregon citizens can carry up to one ounce of pot worry-free.
Although it remains a relatively small market, Oregon’s liberal laws mean that it’s easier for companies to obtain a growing license here than in any other state, and that alone makes it a very attractive location for investors.
Which Will Be the Next States to Legalize 2019?
206 was a big year for the legalization of marijuana. Now, there are a number of states are considering new cannabis legislation. The following states could pass marijuana laws next year, or possibly even this year.
These include the following:
- New Jersey
- Rhode Island
- South Dakota
The Future of the Marijuana Industry in the US
The state of Colorado has greatly benefited from the legalization of cannabis from an economical as well as a social standpoint. Not only did the state generate $23.7 million worth of taxes from the industry during the 2015/ 2016 financial year, but these figures show a whopping 70% increase from the previous year.
However, it’s not just Colorado that’s benefitting from marijuana legalization, as Washington State is also enjoying average sales of up to $2.4 million a day, while tax revenue sits at $65 million per year, according to 2015 stats.
Ever since Washington State legalized marijuana in November 2012, the crime rate is lower than it has been in 40 years, and this includes the rate for violent crime. The same can be said of Colorado, which has seen a drastic reduction in traffic fatalities and arrests, saving millions in American taxpayer’s dollars.
The positive economic and social transformation is shown by Colorado and Washington is what motivated Alaska and Oregon to follow suit. Hence both latter states legalized the drug just a few years after. It is no doubt that the positive results seen from the legalization of marijuana for recreational use in these states will increase the drive to legalize it on a federal level as well, especially because it would lead to savings of $13. 7 billion for the country, according to a Harvard study.
Why marijuanas should be legal for medical reasons.
Aside from the economic benefit provided by cannabis legalization, there is also the medical component of the drug. Currently, intensive research is underway to determine the efficacy of the cannabinoids in marijuana to treat both mental and physical ailments.
For example, several studies have been done to show that cannabis can, in fact, alleviate pain for arthritis and multiple sclerosis patients while slowing down the progression of Alzheimer’s and cancer. Additional evidence of an anecdotal nature proves that cannabis use can help to treat PTSD symptoms among many other psychological conditions that affect war veterans and other trauma survivors.
On the other hand, Arena Pharmaceuticals Inc. is undertaking the study of the tetrahydrocannabinol (THC) compound, which can also be found in the cannabis plant. The purpose is to produce industry-leading pain alleviation treatments, like its first cannabis-based pharmaceutical drug candidate ADP371, which is currently in clinical trials.
Meanwhile, GWP is also conducting trials for cannabis-based drug Epidiolex, which is rich in the CBD cannabis compound and has been shown to alleviate seizures in extreme epilepsy sufferers.
It is no secret that the legalization of marijuana in Alaska, Colorado, Oregon and Washington has vitalized the push for federal recognition and legalization of the drug. However, many say that it’s still early days and that the positive results experienced by these states are not enough to justify the overhaul of national drug policies.
Still, this doesn’t take away from the fact that these states have seen immensely positive economic and social transformation take place as a result of legalization, and none of the feared side-effects have come to pass as yet.
Plus, the studies currently underway to investigate the medicinal properties of marijuana are not only promising but are set to stimulate the legalization of medical cannabis in even more states.
As an overall industry, the cannabis sector is still dicey though. For example, both Washington and Colorado struggle to reach stable prices while cannabis retailers have less-than-ideal tax policies to deal with.
Not only that, but cannabis-based businesses find it very difficult to raise capital thanks to the ambiguity surrounding the legal status of marijuana, and it seems like federal legalization is something of a pipe dream at the moment (excuse the pun).