Ways to Invest in Cannabis
With cannabis now legal in Canada, are you considering ways to invest in cannabis? If so, start your journey here.
Canada’s marijuana legalization helped kickstart a financial revolution in the stock market with the launch of a diverse portfolio of marijuana stocks.
With the boom of public cannabis businesses, are you considering investing in cannabis companies? If so, start your journey here.
The diverse portfolio of marijuana stocks has made its mark in the global market thanks to the amount of money raised from investors and the attention the cannabis sector is attracting from established industries.
While it’s anyone’s guess as to what’s to come, it seems we are still in the early days of this new and burgeoning industry, as a variety of nations begin to move forward with plans for legalizing marijuana. That means there’s likely still money to be made in cannabis stocks as the market builds and the variety of cannabis products expands over the next few years.
There are many differing opinions about how much the global legal cannabis market will be worth in the years to come, with estimates including US$27.89 billion by 2024 and US$73.6 billion by 2027.
But one thing is almost certain: The market is set to grow as opinions surrounding the plant evolve over time and as platforms crop up to supply different consumption preferences. And all of that will mean more cannabis investment opportunities with both existing companies and future entries to the market.
For now, let’s take a look at where you can invest your money at this point in time.
How to invest in cannabis: Canadian cannabis stocks
First thing’s first: the Canadian market. This is the obvious place to start as marijuana is now legal in the country and these cannabis stocks are less likely than their US counterparts to suffer from the risk of political volatility.
Due to the uncertainty of investing in the US marijuana space, where the drug is not legal at the federal level, Canadian firms have been forced to determine whether to divest existing assets in the US or consider delisting from senior exchanges in Canada.
While sentiment for the Canadian investing space has decreased, investors are eagerly looking to companies moving into the edibles and beverages markets as new products hit the market.
For a list of Canadian marijuana stocks to consider, click here and here.
How to invest in cannabis: US cannabis stocks
Although some US states have legalized cannabis, American cannabis stocks may be riskier than those in Canada due to federal restrictions on the sale and cultivation of cannabis.
However, as the saying goes, the greater the risk, the greater the possible reward. The US market could grow up to US$30 billion by 2025, and that’s not even including the size of the market if nationwide legalization happens. It’s easy to see that US cannabis stocks could inherit a huge chunk of the pie if federal law finally legalizes the commodity.
All in all, picking the right US cannabis stocks could mean massive gains if the plant is ultimately legalized federally. It’s important for investors to do their research and to be aware of the risks and potential benefits involved in investing in the space.
For a list of US cannabis stocks to consider, click here.
How to invest in cannabis: A side note
Many companies in the cannabis space have begun to veer in one direction or another. For example, some of the largest marijuana producers have moved towards deals with beverage or pharmaceutical companies for the production of novel new products. Others in the space continue to pursue the recreational market and innovation with new delivery methods.
One example is Canopy Growth (NYSE:CGC,TSX:WEED), which has teamed up with Constellation Brands (NYSE:STZ), a leading producer in the alcoholic beverage industry. Tilray (NASDAQ:TLRY) through its partnership with Sandoz Canada, also ranks among the top cannabis growers that have business deals in place with established beverage firms.
Another aspect to consider is whether to pursue the big caps or small caps. That has a lot to do with personal comfort. While big caps are often regarded as more stable stocks than small caps, in the cannabis industry there’s been considerable volatility, even in the large companies and particularly with Tilray.
How to invest in cannabis: Cannabis ETFs
If you really know your cannabis companies, then you could enjoy larger gains by just investing in those specific firms. However, if you aren’t overly familiar with the cannabis space or you are new to it, it could be a good idea to check out the cannabis exchange-traded funds (ETFs) available.
A cannabis ETF gives you exposure to several different cannabis stocks and takes the guesswork out of cherry picking which stock to bet on. One issue with ETFs is that, like any other group dynamic, if one stock drops off it brings the whole fund down proportionally with it. Of course, the opposite is also true.
Recently investors have seen the addition of new ETFs offering exposure into the US market, including firms with entries into the hemp space, thanks to the sales of CBD products.
For a list of cannabis ETFs to consider, click here.
How to invest in cannabis: Final thoughts
No matter which way you slice it — or grind it, in this case — the cannabis market is an exciting business to invest in right now. Whether you invest in Canadian or US marijuana stocks, cannabis ETFs or if you’re still waiting on the sidelines for more maturity from the types of cannabis companies trading, this industry is one to watch, and one that looks like it’ll keep climbing in the future.
Want more details? Check out these articles for more INNdepth coverage:
Want an overview of investing in cannabis stocks? Check out Investing in the Cannabis Industry.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.