In 2017, Colorado's marijuana industry boasted $1.5 billion in sales. Colorado ranks 19th in gross state product. Colorado is also the 21st most populated state. In fact, there are fewer people in the entire state of Colorado than there are in New York City. Currently, California is the only state in the top ten in terms of population or gross state product that's legalized recreational marijuana. This means two things. One, with the widespread push for legalization, the marijuana business is primed to explode. Two, the market is still fringe enough for investors to get involved for a fraction of what they'll have to pay in the future. The question that remains is: which companies are going to offer the best returns?
The fact that marijuana is illegal on the federal level, not to mention in almost every other country on the planet, makes it pretty difficult for companies to get a secure line of credit from the bank, as many banks and funds don't want to deal with the risk of fines on the off chance the company they're invested in inadvertently does something illegal. On top of this, even if a marijuana company is operating within the law, they pay exorbitant taxes on all of their income, limiting their investment potential. With all this in mind, we've decided to list a few places you can invest in order to give you some inspiration. These stocks are by no means your only options(pun intended), but they've definitely caught our eye.
Canopy Growth Corp
Based in the bourgeoning Canadian market, Canopy Corp. has a few distinct advantages that most cannabis companies don't have. For one, they're financed by the bank of Montreal, which gives them a certain legitimacy. Canopy Corp. also already has an international footing and has recently started selling in Brazil and German. They also recently acquired Annabis medical, a Czech medicinal marijuana company. That said, Canopy isn't wanting for competitors. Companies like Aurora Cannabis (who has a nasty track record of diluting its shareholders) are also expanding aggressively. Still, Canopy is the big kid on the block, and while many marijuana stocks are down right now due to companies trying to grow too quickly, Canopy seems to have solid liquidity. Canopy's own value is down close to 30% since mid-June, but this might just be the buy low situation you're looking for.
Cronos Group Inc.
Cronos is another Canadian company and the first Cannabis-based corporation to be listed on NASDAQ. As with most Canadian marijuana companies, 2018 has been a year of aggressive expansion for Cronos. That said, they're much smaller and much more volatile than many of their competitors. One thing that makes Cronos interesting however is the increase in production they're predicting. According to Forbes, Cronos' production capacity is going to increase by about 300% by 2019. If this sounds far fetched, it's worth noting that the company has a history of rapid growth. A year ago, Cronos didn't sell cannabis oil. In Q1 of 2018, it was 9% of their total sales. It's no good pretending that they're not a risky investment, but Cronos is one of the most dynamic cannabis companies around right now.
Dubbed by many as "The Apple Store for Weed," MedMen, an American based cannabis retailer, has just gone public. They have a partnership with Cronos Group, and are valued at $1.6 billion. Some believe that MedMen is way overvalued, and the fact that their stock price dropped 20% just four days after their IPO certainly supports this theory. That said, there are few companies as poised to take over the American retail space once legalization occurs. They already have a store on 5th Avenue in Manhattan.
Hemp Inc., trading at just $0.28 per share, is perhaps the most exciting company on this list. The advent of various CBD-based medicines adds to hemp's value, but the Hemp Farming Act, passed in June, could really give this middling industry a big boost. Now that hemp is no longer a schedule I controlled substance, people can start cultivating it everywhere. The CBD industry is expected to be worth $2.1 billion by 2020. That said, CBD is only a small part of hemp's value. It's also used in clothing, food, biofuel, ropes, and plastics. Hemp Inc. is going to reap huge benefits from the coming weed boom, but is diversified enough that it won't solely rely on CBD to make money.
Matt Clibanoff is a writer and editor based in New York City who covers music, politics, sports and pop culture. His editorial work can be found in Inked Magazine, Popdust, The Liberty Project, and All Things Go. His fiction has been published in Forth Magazine. -- Find Matt at his website and on Twitter: @mattclibanoff