Cannabis Shares - a growing market

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Cannabis Shares - a growing market

Published Date: 2018-10-11 | Source: Share Picks USA | Author: Bruce Ingram | Comments

Cannabis Shares - a growing market

The Cannabis share market is currently being driven by de-regulation. Both in North America and South Africa.

In Canada medical use of Cannabis has been legal for a while now and recreational use of cannabis will be legal from 17th October. In the US medical use of cannabis is legal in 30 states and recreational use legal in 9 states. Australia legalised medical use of cannabis in 2016. The statistics on the number of people using cannabis legally in North America will only be accurate once it is fully de-criminalized. However, it is predicted that there is significant growth potential in cannabis shares.

Here are some of the cannabis companies listed on U.S. exchanges either directly or via OTC shares:

22nd Century Group Inc (NYSE: XXII): Aphria Inc (OTC: APHQF): Aurora Cannabis Inc (OTC: ACBFF): CannTrust Holdings Inc (OTC: CNTTF): Canopy Growth Corp (NYSE: CGC): Cronos Group Inc. (NASDAQ: CRON): Green Organic Dutchman Holdings Ltd (OTC: TGODF) Green Thumb Industries Inc (OTC: GTBIF) GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH): iAnthus Capital Holdings Inc (OTC: ITHUF): Medical Marijuana Inc (OTC: MJNA) MedMen Enterprises Inc. (OTC: MMNFF) Scotts Miracle-Gro Co (NYSE: SMG):THC Biomed Intl Ltd (OTC: THCBF): Tilray Inc (NASDAQ: TLRY): Zynerba Pharmaceuticals Inc (NASDAQ: ZYNE):

As the cannabis market is very young none of the tools I normally use are able to provide meaningful historical data on US cannabis shares. Also, there is limited analyst coverage of cannabis shares. For these reasons I am unable to provide detailed comments on the investment potential of cannabis shares.

What I can say is the following: The North American cannabis market is forecast to grow at a CAGR 28% until 2023. Similarly, the South African market could see near term growth due to local deregulation. There is increasing interest in developing this market with the danger that the market becomes overtraded. There has been speculation that companies like Pepsi would get involved in the cannabis market. If some of the big players like Altria or Phillip Morris get into the cannabis market there could be significant production growth as the producers would not be able to keep up with supply in the short term. Pepsi announced last week that they were not getting into the cannabis market causing Tilray's shares to drop 16% and Canopy Growth shares to fall 6%. Other cannabis shares experienced similar price drops.

As far as ETF's are concerned it seems that custody banks and broker-dealers are hesitant to get involved due to institutional risk. There is one ETF worth investigating and that is Alternative Harvest with a ticker of MJ

From what I can see one of the companies that warrants detailed research is Aurora Cannabis

Aurora provides medical cannabis products. The company is currently listed on the Toronto Stock exchange. They have applied for a listing on the NYSE and if approved will begin trading by the end of October. The NYSE ticker for Aurora will be "ACB"

The company website can be found here: www.auroramj.com

Other shares worth researching:

  • Tilray Inc (NASDAQ: TLRY)
  • Canopy Growth Corp (NYSE: CGC)
  • Cronos Group Inc. (NASDAQ: CRON)
  • GW Pharmaceuticals PLC- ADR (NASDAQ: GWPH)

I believe there is value to be had in cannabis shares, however they currently appear to be expensive and very cyclical. The market is also characterised by mergers and acquisitions. Invest with caution. Consider averaging into the market. In other words, do your research before buying.


Disclaimer: Please note that I am not a Registered Financial Planner. The articles I write are based on my own personal research and for my own use and is not to be construed as financial planning advice. At all times readers are urged to exercise caution when investing in any financial instruments, to do their own research


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