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Plant-touching cannabis companies are directly involved with the production, cultivation, manufacturing or processing of marijuana products. While so many companies all around the globe are fighting tooth and nail to become the biggest cannabis producer in the world, other companies are quietly fighting over the huge opportunity to service and supply plant-touching companies with everything that they need to function. A couple examples of ancillary services include security, media, and marketing.
Beginner's Guide to Investing in Marijuana Stocks | The Motley Fool
In a report, Deloitte estimated that the size of the ancillary cannabis industry would be approximately 2. Despite coming from Deloitte, many marijuana investors still wonder why will the ancillary side of the legal marijuana industry be so much bigger than the plant-touching side. The fact of the matter is, that most cannabis consumers already consume cannabis.
Given how much money stands to be made in the marijuana industry, it should come as no surprise that these cannabis companies have big budgets alongside their grandiose goals. By legalizing cannabis itself, companies performing already-legal services like security and marketing benefit from the new business. Hence, why the ancillary cannabis industry might become 2. These are just three of the MANY opportunities available to investors looking for a play on the ancillary side of cannabis.
As the industry grows, there will inevitably be more and more companies that go public, it is up to you or your financial advisor to decide where to place your bets. As the green rush continues, some companies will rise to the top while others inevitably fall to the wayside. This site uses Akismet to reduce spam. Learn how your comment data is processed. Holdings Corp. Headquartered in the UK, the company is — by and large — a development-stage biotechnology firm. Still, it already has one product on the shelves — Sativex — a spray-on medication used for the treatment of spasticity in multiple sclerosis patients.
The company has approval in a total of 16 markets for this product, with applications for approval pending in another However, the US is not among any of these groups. A treatment that the company is currently developing, Epidiolex, also looks promising.
In clinical trials, it has proved effective in the treatment of childhood epilepsy. Still, some long-term investors could make massive profits if Epidiolex manages to fulfill its early promise. This company is a veteran in the supply of garden care products. Besides helping marijuana plants grow better, Scotts Miracle-Gro is a major marijuana stock since it owns Hawthorne Gardening, a wide selection of brands that provide the market with hydroponics.
Hydroponics involves growing plants directly in water, which is a classic method of cultivating pot. Medical Marijuana, Inc. The companies in the fund include both publicly traded entities, like Axim Biotechnologies, and private companies, such as marijuana marketing specialists MPS international.
The company owns three marijuana production and marketing companies outright, with strategic interests in three more.
Not all investments in the marijuana sector involve publicly listed entities. There are several interesting over-the-counter marijuana penny stocks that you would do well to have a look at:. The main thing you need to look out for before you invest in any marijuana business is its legal status. And those profits should grow. Innovative Industrial Properties currently leases properties in 10 states.
The company should have plenty of room to expand in these states and elsewhere. KushCo Holdings ranks as the leading supplier of packaging solutions to the U.
The company manufactures a variety of products -- including pop-top bottles, tubes, and vaporizer cartridges -- designed to meet the needs of cannabis growers and dispensaries. While KushCo's sales are skyrocketing , the company isn't profitable yet. One big reason why that's the case is that KushCo continues to invest in expansion.
KushCo has also experienced some growing pains in the form of higher air freight and quality control costs associated with meeting the surging demand for its products. However, KushCo should be able to eventually reach sustainable profitability as it capitalizes on the growth opportunities of the marijuana market in the U. KushCo has especially targeted Canada and Europe as opportunities for growth.
Understand your consumer base
The U. Several of the company's packaging products could enjoy higher demand as a result of hemp legalization. OrganiGram Holdings is a Canadian licensed marijuana producer that targets the country's medical and recreational marijuana markets. The latter market is where the real excitement for OrganiGram is these days. The company has supply agreements with provincial crown corporations government-owned companies in Canada or retail partners for recreational marijuana in nine of Canada's 10 provinces. Although Canada is where OrganiGram currently makes its money, the company isn't limiting itself to its home country.
How to Invest in Cannabis - In Its Many Forms
The company also made a significant investment in Serbian hemp producer Eviana. OrganiGram doesn't rank among the biggest Canadian marijuana growers in terms of capacity.
However, the stock looks more attractive than most of its peers in several ways. For one thing, unlike many Canadian marijuana growers, OrganiGram has consistently posted profits in recent quarters. The company also has one of the lowest production costs in the industry -- a key reason why OrganiGram has been profitable while many of its rivals weren't.
The stock's valuation looks especially appealing when you compare how much annual production capacity per dollar invested you get with OrganiGram versus that of larger Canadian marijuana growers.
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Origin House is based in Canada, but the company's primary operations are in the U. The company started out with a business model centered on royalty streaming, which provides financing to marijuana businesses in exchange for a percentage of future revenues.
Now, however, Origin House is a distributor of cannabis products, including several of its own brands. The company's main focus is on California. The state has the biggest legal marijuana market in the world. California's legal recreational marijuana market opened in During the market's first year, there were plenty of bumps in the road, many of which were related to burdensome regulations and high tax rates.
But the state appears to be resolving some of the issues, paving the way for Origin House to grow even more in California. Meanwhile, Origin House is also looking to grow in other markets. The company acquired Smoke, a major Canadian vape retailer, in a deal that opens the door for expansion of its own brands into the Canadian recreational pot market.
In addition, Origin House could seek to replicate its distribution model in other states down the road. You don't have to buy individual marijuana stocks to profit from growth in the cannabis industry. Exchange-traded funds ETFs provide a way to buy multiple stocks in one fell swoop. And there are a couple of marijuana-focused ETFs. The index includes mainly marijuana or hemp companies.
While this index includes many marijuana or hemp stocks, it also includes some tobacco-related stocks. Although marijuana ETFs provide diversification among a group of marijuana stocks, they do have a few drawbacks. The ETFs also don't have significant holdings in marijuana stocks that are primarily focused on the U. Before buying marijuana stocks or ETFs that hold marijuana stocks, you definitely need to be aware of the risks associated with investing in the marijuana industry. Some of these risks are common to stocks of any industry, and include potential threats from competition and the possibility of scandals.
But there are some risks that are especially applicable to marijuana stocks. The market caps for most marijuana stocks are very high compared to their historical sales. A lot of their valuation hinges on expectations of tremendous growth.