Despite a massive slowdown in cannabis funding and stock price growth, with most of the largest players in the space largely under-performing the wider market, trading remains hot. During the last a couple of years, the marijuana industry has seen greater than $26 billion in funding deals and M&A.
Past the figures, marijuana-related companies have really reached the mainstream, with several big ETFs trading on major stock exchanges. One of them, these trade on the NYSE: the ETFMG Alternative Harvest ETF (NYSE: MJ), the AdvisorShares Pure Cannabis ETF (NYSE: YOLO), the Cannabis ETF (NYSE: THCX), and also the Amplify Seymour Cannabis ETF (NYSE: CNBS).
Further evidencing the mainstreaming of cannabis are brands like weed grower Cronos Group Inc. (NASDAQ: CRON) and cannabinoid-based biotech GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH) listing around the Nasdaq, Canopy Growth (NYSE: CGC) trading around the NYSE, and Acreage Holdings (OTC: ACRZF) going after Super Bowl ads and obtaining political big guns like John Boehner and Bill Weld on board as advisors.
we attempt to keep readers up-to-date with the newest news, stock picks, and expert commentary. But, while we continue to obtain the question about the best way to spend money on marijuana stocks, we’ve chose to put a brief guide together for you. Before moving on, it’s necessary for readers to understand that purchasing cannabis will not be restricted to growers or retailers.
There are many companies providing ancillary services to the industry, as well as many derivative plays, like pharma and biotech companies making cannabinoid-based drugs and repair/product providers that employed to operate outside the marijuana industry but have gotten on board since legalization.
The Over-the-Counter Issue – While multiple states inside the U.S. have legalized cannabis for either recreational or medical uses, allowing companies to thrive, the plant is still illegal over a Federal level – classified as a Schedule I drug from the DEA. This has caused it to be difficult for most companies to get on the Nasdaq or perhaps the NYSE.
Seeking alternative avenues to boost capital, many companies have gone public in Canadian exchanges, and some have performed so by trading on over-the-counter U.S. exchanges. Because of this many publicly traded cannabis companies are certainly not subjected to exactly the same degree of scrutiny that major exchanges and the SEC impose – although those trading on the TSX and CSE are subjected to heavy scrutiny.
“The over-the-counter exchanges present challenges. They’re not taken as seriously because the bigger exchanges, and in addition they permit a greater amount of latitude in terms of the expertise of the company that will trade upon them. As a result, most of the companies (…) which 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 was somebody which 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 which not every OTC or penny stock is going to be avoided no matter what. “There is really a prejudice against inexpensive stocks that I think we must have to escape as an industry and begin looking towards reverse splitting our stocks, having fewer numbers of shares and higher prices because the optics onto it are better,” Bocskor voiced.