As of midnight, on October 17, 2018, Canadians are free to legally purchase recreational marijuana in licensed dispensaries and designated sellers. There are estimates that this long-awaited legalization could generate billions in annual revenue and a surge in marijuana stocks.
The expectation that the fledgling legal marijuana industry is set to be a success shows up in the current share price of most cannabis-based business stocks. The North American Marijuana Index has recently reflected the following performances from many cultivators and cannabis businesses (including developers of cannabinoid-based pharmaceutical drugs); an astounding growth greater than 700% since the beginning of 2016.
What does this mean for Marijuana Stocks and Investors?
Generally speaking, investors who initially invested in the marijuana business or cannabis business markets back in 2016 are in the green in 2018. But, what does the future look like?
As the industry expands, there is a risk that the field will become overcrowded and the industry could become lodged in a valuation bubble. Prospective investors should attempt to differentiate between the different marijuana stocks available- meaning, identifying the ones that are worth investing in.
Here are the top 5 marijuana stocks worth keeping an investor’s eye on:
1. GW Pharmaceuticals
This is the pharmaceutical company that made history with its cannabis-based pharmaceutical drug. On the 25th of June, the FDA (Food and Drug Administration) approved their drug, Epidolex.
Epidolex is the first cannabis-based drug to receive such approval. Epidolex is based on cannabidiol, CBD, and is used to treat two rare and potentially severe forms of epilepsy. While drugs created with synthetic versions of cannabinoids have been previously approved, Epidolex is the first cannabis-drug to receive the approval.
Investing in GW means that you will be buying into the (currently) only company that has a cannabis-based drug being distributed. Additionally, the future for GW Pharmaceuticals could see an advancement in research of medical marijuana.
GW Pharmaceuticals NASDAQ: GWPH
2. KushCo Holdings
KushCo is a company that has tapped into the market niche of cannabis product packaging. With the surge of cannabis products across the majority of the Western world, KushCo is meeting a high demand. The company is focused on providing cannabis packaging solutions that are tamper-resistant as well as child-resistant. KushCo has a current global reach of approximately 5000 business that they are working with.
KushCo is working with Health Canada to meet the lengthy list of regulations for safe cannabis packing, including branding and labeling.
The future for KushCo looks bright; the company has recently expanded into the solvent and gas area of cannabis production as well and their recent purchase of the Summit Innovation company reflects this interest. These gases and solvents are set to play a profitable role in the cannabis retail industry as hydrogen gas is required for the production of cannabis oils and solvents are required for the creation of cannabis concentrates.
KushCo has steadily crept into the supportive highly focused niche areas of the cannabis areas and looks set to increase their capital with the expanding industry.
KushCo NASDAQ: KSHB
3. Liberty Health Sciences
While this company is based in Canada, it is also involved in Florida’s medicinal marijuana market. There are only fourteen medical marijuana licenses available for producers in Florida, of which Liberty Health Sciences holds one. Why is this important? This limited number of licenses equates to a limited amount of competition for the Liberty Health Sciences company. This paves the way for financial success, and here are a couple of insights to highlight this:
- Liberty Health Sciences recently closed their last quarter with approximately 10, 000 patients
- Liberty Health Sciences saw a jump of 112% from their last quarter
- Liberty Health Sciences increased their revenue by 50% and closed their most recent quarter with $2.2 million in revenue
The future for Liberty Health Sciences involves them having the largest cultivation in Florida. The company is currently setting up a cultivation area that covers approximately 225,000 sq. ft.
Liberty Health Sciences has expressed interest in expanding into other states; but, for now, Florida has an older population that makes for a profitable target market for medicinal marijuana.
Liberty Health Sciences NASDAQ: LHSIF
4. CannaRoyalty Corp.
This is another Canadian based company that is expanding into the US. CannaRoyalty is tapping into a lucrative niche in the Californian pot industry; distribution. While many hear of the boundless brands in the many Californian dispensaries, not many realize that there are only a few distributors that will be given (or are given) licenses to transport the marijuana products. CannaRoyalty is focusing their strategy on obtaining companies that will enable them to expand their distribution market share in the Golden State.
CannaRoyalty NASDAQ: CNNR
5. OrganiGram Holdings
This is another Canadian company however it is one of the very few that is based, not in B.C or Ontario, but in Atlantic. While most Wall Street watchers have kept their eyes on companies out of Ontario, Quebec or British Columbia, this company has quietly become a major player in the Atlantic area.
Additionally, OrganiGram has a growing set up that is designed to maximize yield, i.e., maximize profit. The company uses a three-tier growing system that is designed to the least amount of space for the highest yield. This is a key component for the company and could place them amongst the top cultivators in Canada.
OrganiGram Holdings NASDAQ: OGRMF