As the cannabis sector continues to mature, investors are gaining exposure to a variety of options in the marijuana investment market. The explosion of listings from marijuana companies in the past few years has led to the addition of sector-based divisions in the space.
While the overall cannabis space offers investors access to companies operating in a variety of industries, many firms are sticking with one particular point of entry to the cannabis space.
Market cap growth for public legal marijuana firms has raised some questions on the proper valuations for these companies, but positive sentiment for the marijuana business has led to a rush for new companies to list with increasingly diverse operations and business goals.
Here are a few new sectors that investors can gain exposure to thanks to these marijuana stocks.
State legalization opens doors to US marijuana stocks
Cannabis investors have thrown their support behind the expanding list of publicly traded multi-state operators (MSOs) focused on the US sector.
While cannabis remains an illegal substance in the US at a federal level, several states have moved forward with legal cannabis programs that have propelled the launch of dispensary networks and cannabis products.
These state-based programs differ in how restrictive they are for marijuana legalization. Some states, such as California, Denver and Nevada, have legalized recreational use as well.
Thanks to these programs, companies have risen to offer consumers a variety of products, and they have been able to secure immediate revenue from cannabis sales.
Investing in these companies has provided some accelerated growth for shareholders. MSOs have expanded their reach and are investing in the new markets that are opening as legalization programs in the US move ahead.
“I think that the US companies have the confidence of investors and they’re going to be able to raise more capital,” Alan Brochstein, an analyst with 420 Investor, told the Investing News Network (INN).
Sentiment and market capitalizations for these companies have increased in 2019, with the potential for these MSOs to lead the sector once full legalization of cannabis takes place in the US.
Rise of hemp and CBD investing opportunities
Thanks to the passing of a farm bill in the US, federal laws for hemp changed and it became legal. This opened the doors to newfound interest in companies offering products in the health and wellness space derived from hemp.
Cannabidiol (CBD) items have gained interest from consumers as novelty items aligned with health and wellness factors, not just a recreational use.
These products also offer an easier entry for consumers who may be intrigued by the cannabis plant but are unsure of traditional consumption methods.
Some firms have dedicated their entire business platform to these CBD products, giving investors an option in hemp stocks. Charlotte’s Web (CSE:CWEB,OTCQX:CWBHF) is one such company.
The majority of cannabis companies have expanded the reach of their business goals with the intention of launching products designed to appeal to consumers looking for CBD-based novelty items for the health and wellness space.
The mania for the CBD market has been met with words of caution from the scientific community, which has warned consumers that much is still unknown about the potential medical benefits of CBD.
Retail starts to make its mark
In the US, a variety of MSOs hold vertically integrated operations, meaning that they have branded products available in stores.
The retail situation in the Canadian market is very different because provincial agencies were allowed to determine regulations on marijuana retail operations. This led to a division in the restrictions of these markets.
Companies such as Fire & Flower Holdings (TSXV:FAF,OTC Pink:FFLWF) and High Tide (CSE:HITI,OTCQB:HITIF) have moved forward with retail strategies that include uniform store experiences and branding. They will open across Canada as permitted.
In April, Ontario, arguably the largest cannabis market in Canada, opened its doors to a privatized retail market with 10 initial stores across the province.
Stores from multiple parties, including some in partnership with licensed producers, were opened following a lottery selection process. More stores are set to open throughout the year.
Ancillary market in cannabis expands with the industry
Alongside the growth of the marijuana industry, ancillary business opportunities have risen to support the emerging space.
One of the biggest accompanying industries to cannabis has been accessories for the consumption of marijuana.
These products range from specialty bongs, materials for marijuana rolls, grinders and other dried flower-centric items.
As consumer demands have diversified, refined cannabis extracts have increased in market appreciation and interest has also risen for vaporizers, oil extracts and other novel methods of consumption.
Another sector that has risen alongside marijuana growers is the packaging industry, where the focus is on creating packaging for products sold to consumers.
KushCo Holdings (OTCQB:KSHB) specializes in the packaging industry for the cannabis market. This company offers an interesting perspective on the listing rules for marijuana-related companies.
“If anybody can uplist, we certainly have a good opportunity to do so,” Jason Vegotsky, chief revenue officer of KushCo, previously told INN, referring to a potential upgrade for the company to a senior exchange such as the NASDAQ or New York Stock Exchange.
Medical marijuana research leads to potential future discoveries
Most of the Canadian producers don’t limit themselves with a pure medical or recreational focus. Rather, all companies trading in the stock market pursue consumers across the board.
The medical market is poised to be dominated in the future by the medical research done by companies investigating compounds of the cannabis plant for the treatment of serious diseases.
The pharmaceutical CBD-based product is designed to treat seizures associated with Lennox-Gastaut syndrome and Dravet syndrome.
“Today’s approval of Epidiolex is a historic milestone, offering patients and their families the first and only FDA-approved CBD medicine to treat two severe, childhood-onset epilepsies,” Justin Gover, GW’s CEO, said in a press release when the drug was approved.
This approval was seen as the FDA moving forward with an inclination to approve of the benefits of medical cannabis-based medicines.
As the marijuana sector continues to expand in the public market, investors have a variety of options to gain exposure to this space.
The marijuana sector is set to disrupt other industries as its adoption continues across different markets.
Players from established industries — such as alcohol, tobacco and pharmaceuticals — have made an early entry into the cannabis space by way of investment partnerships with marijuana companies.
Want more details? Check out these articles for more INNdepth coverage.
- Cannabis Investment: Canadian Cannabis Stocks
- Marijuana Stocks to Watch in 2019
- Here’s Why 2019 Top Marijuana Stocks Will Be Different
Want an overview of investing in cannabis stocks? Check Investing in the Cannabis Industry
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Editorial Disclosure: High Tide is a client of the Investing News Network. This article is not paid-for content.
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.