If I could travel back in time I would go to the year 2012. I would revive my vacations in Indonesia and as soon as I could, I would have bought a considerable amount of bitcoin. Yes, speaking in simple terms, without being so demanding. Unfortunately, this is impossible, however, today I can speculate on a booming industry whose potential is so promising that without being legal in some places, brands adjacent to this super industry are already being built and positioned. That's right, as you know I'm talking about the cannabis industry. Its versatility and accessibility are turning marijuana into a main protagonist in terms of economy and culture.
Weed's industry expectations are huge, nothing less than an annual growth rate of at least 25 percent through 2030. As governments across the globe work on marijuana legalization and regularization people are waiting for new opportunities. Entrepreneurs and existing companies want to participate, and many investors are seeking to profit.
So, how to start. Let's start from the breaking point. “After a disappointing 2021 on the legislative front, big companies and influential players will use this year to strengthen their presence in existing cannabis markets and adjacent industries. As we look forward to 2022, one of the big themes for cannabis investors should be the emergence of the brands.” Said Seymour, who runs Amplify Seymout Cannabis ETF.
While factors beyond their reach, such as legislation and policies whose dissolution will set the pattern for the future. Businessmen and entrepreneurs build brands and categories adjacent to the cannabis industry. Whereas the trade and consumption of marijuana is legal, people seek to solidify and capitalize the existing brands. How?
Cannabis ETF’s
Exchange-traded funds are investment funds whose main characteristics are that they are traded on secondary stock markets. Unlike the shares of traditional funds, which are subscribed or redeemed at their net asset value (which is calculated after the close of each session). The EFT shares can be bought and sold on market secondary, such as stocks or bonds. Its listing on secondary markets allows investors accustomed to operating in the markets, buying and selling similar to how it is done with other listed assets.
It is not surprising that Seymour's best way to invest in the rapidly evolving space is via his actively managed ETF. He says that for investors that want to participate in this industry that is changing day by day an active EFT is the best option.
Marijuana stocks as represented by the ETFMG Alternative Harvest ETF, have vastly underperformed the broader market. The ETFMG alternative Harvest ETF has provided a total return of -66.3% over the past 12 months. As more and more companies want to have absolute advantage are looking to minimize their operating costs to the minimum so their profits may work as an incentive to create an opportunity gap and more and more direct and ancillary companies have participation in this industry.
Three main categories of the marijuana industry are:
- Marijuana growers and retailers, cultivate and package cannabis products.
- Biotech companies, develop and market cannabis-based pharmaceutical drugs.
- Ancillary marijuana business, provide products and services to cannabis companies.
Marijuana industry is so pragmatic and multifunctional that it presents endless opportunities directly and indirectly.
Best value marijuana stocks
According to Investopedia there are 5 outstanding companies according to the value these companies are taking.
Cresco Labs Inc.
Cresco Labs is a cannabis products company involved in growing, manufacturing and distribution. It operates retail cannabis stores in 10 states. The company is growing rapidly through acquisitions and opening new retail locations. Cresco´s pending acquisition of Columbia Care will make it the largest multistate operator based on revenue. Cresco is looking to participate in 18 U.S markets, including 12 states with annual cannabis sales of more than one billion.
Aurora Cannabis Inc.
Aurora Cannabis is a Canadian producer of medical cannabis. Is one of the selected companies that hold a GMP certificate for cultivation and distribution. This gives a considerable comparative advantage in the market with more than 400 million potential customers and very few companies able to meet the demand. With the increasing number of countries legalizing medical cannabis, the company has adopted very aggressive international strategy. It is planning to expand to Germany, Denmark, Italy, and Australia.
Trulieve Cannabis Corp.
Trulieve is a vertically integrated cannabis company with operations in 11 states. Trulieve has expanded its footprint in the United States with the opening of its 99th and 100th cannabis dispensaries. In addition to being the leading medical cannabis company in Florida, Trulieve has been growing operations in Massachusetts, Connecticut, California, Pennsylvania, and West Virginia, prior to the big merger with Harvest Health and Recreation Inc.
TerrAscend Corp.
TerrAscend is a Canada-based vertically integrated cannabis company with operations in the United States and Canada. In August the company announced that it had completed the acquisition of KISA Enterprises for $28.5 million. Also, TerrAscend announced that it will buy Gage Growth Corp for 545 million and thereby expand its operations in the United States.
Verano Holding Corp.
The company is a cannabis operator in the United States, which is dedicated to improving communal welfare. The company operates eight production facilities of approximately 7,500,000 square feet of cultivation.
|
|
Price |
Market Cap ($B) |
12-Month Trailing P/S Ratio |
|
Cresco Labs Inc. |
CA $4.08 |
CA $1.2 |
1.1 |
|
Aurora Cannabis Inc. |
1.22 |
0.4 |
1.5 |
|
Trulieve Cannabis Corp. |
CA $13.33 |
CA $2.5 |
1.6 |
|
TerrAscend Corp. |
CA $2.2 |
CA $0.5 |
1.6 |
|
Verano Holding Corp. |
CA $6.85 |
CA $2.2 |
2.1 |
Fastest Growing Marijuana Stocks
|
|
Price ($) |
Market Cap ($B) |
Revenue Growth (%) |
|
SNDL Inc. |
2.32 |
0.6 |
2,250 |
|
Trulieve Cannabis Corp. |
CA $13.35 |
CA $2.5 |
54.6 |
|
Cronos Group Inc. |
2.86 |
1.1 |
47.6 |
|
Innovative Industrial Properties Inc. |
94.20 |
2.6 |
44.3 |
|
Green Thumb Industries Inc. |
CA $14.25 |
CA$3.4 |
19.0 |
According to industry analysis firm MJBizDaily, U.S cannabis sales will surpass $33 billion in 2022 before reaching $52 billion by the end of 2026. The global cannabis market is expected to reach nearly $200 billion by 2028, up from $28 billion in 2021. Considering that it is probably that in the future financial institutions may fund cannabis companies which today is illegal, may boost the development of the industry.
Author: Pipo
Gurdus, L. (2022, January 15). Cannabis stocks offer higher growth at lower valuations, ETF manager says — the top 2022 trend he’s watching. CNBC. https://www.cnbc.com/2022/01/15/2022-cannabis-trends-to-watch-how-to-invest-cnbs-etfs-tim-seymour.html
Speights, K. (n.d.). Best marijuana stocks for 2022: Cannabis investing. The Motley Fool. Retrieved October 27, 2022, from https://www.fool.com/investing/stock-market/market-sectors/healthcare/marijuana-stocks/
Reiff, N. (2018, March 9). Top Marijuana Stocks for October 2022. Investopedia. https://www.investopedia.com/investing/top-marijuana-stocks/
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