The legal cannabis industry and its 400% growth rate
Wall Street is hallucinating. It is not the best year for the US stock market, with the S& P500 index losing 0.65% and the Dow Jones falling almost 1% in 2018. However, several investment funds have found a new product with the one that palliate the headaches caused by the market: it is precisely the growing of legal marijuana and the cannabis industry.
Canada has recently become the last country that has legalized the recreational use of marijuana in addition to medicine, a regulation favorable to cannabis that more and more regions are adapting. The Netherlands, South Africa and Uruguay are some of the countries that already have laws that allow the use of cannabis, while thirty states of the United States already leave the use of medical marijuana and nine states also their recreational use. And, meanwhile, Wall Street is being lined with these advances in regulation.
Thus, the Marijuana Index has already been revalued by 398.6% in the last three years, a period in which the S&P 500 has advanced 32% or the Ibex 35 has lost 14.53%. But what is the Marijuana Index? It is simply a stock index composed of 34 North American companies dedicated to the cultivation, production and sale of hemp and cannabis products.
The marijuana products have grown, processed and transported in a totally legal manner and also are sold in stores in California or Colorado. And it is estimated that in the United States will spend about 11,000 million dollars in 2018 in the legal market for cannabis, an expense that is expected to reach 23,000 million dollars in 2022, according to a study.
The cannabis industry and where to invest
There are several companies in this sector that already exist in the stock markets of the United States and Canada and from which, therefore, you can buy stocks. First, it should be noted that companies already listed in the market focus their business in different areas, such as simply growing hemp, laboratories that manufacture drugs with cannabis derivatives or companies that provide secondary services such as the sale of products such as bongs or rolling paper.
And, second, it is important to note that although everything indicates that the legal consumption of marijuana will grow, it is necessary to make a thorough analysis of the company before investing. These are some of the leaders in the legal market for marijuana:
Canopy was the first legal marijuana cultivation company that was listed on the New York Stock Exchange. It is also the company in the sector with the highest market capitalization, which is why it is one of the most media-focused. So far this year, Canopy has achieved a revaluation of 45%, going from approximately $ 25.9 per share in early January to around $ 37 per share at the end of October.
The company, known as the “green giant“, owns several recreational and medicinal brands of marijuana such as “Tweed“, one of the best known, and also sells products to enjoy the consumption of this drug. In total, it has more than 69,000 registered patents.
Cronos Group was one of the first medical marijuana cultivation companies in the Toronto Stock Exchange. The company sells its products to Canada, but also exports them to Germany and has an association with another company in Australia. In addition, it is building new facilities in Israel. Their income was 4,000 million dollars in 2017, compared to 554 million in 2016.
GW Pharmaceuticals are laboratories that market a medicine called Sativex, which in 2010 became the first drug approved to treat multiple sclerosis through cannabis. And, in addition, in June 2018 got in the United States to approve another drug to treat severe cases of epilepsy with a derivative of marijuana.
In the last two years its shares have grown by 10%, although so far in 2018 they have only grown by 3.5%. And although the expectations with this product are high, its sales have declined and GW Pharmaceuticals revenues were 20% lower in 2017 than in 2016.
Cara Therapeutics is a biotechnology company that develops drugs to alleviate chronic pain, products that include medicines derived from opioids and hemp. However, some of its main products are still in the phase of clinical studies and pending approval, which causes a high level of volatility in their quotation.
Kush Bottles is a company created in 2010 that provides packaging and auxiliary products for the marijuana industry. It also manufactures vaporizers, rolling paper and lighters. Its benefits increased from 2,679 million dollars in 2016 to reach 6,202 million in 2017.
With information from Yahoo Finance and GQ