There are few, if any, industries that have exhibited the growth potential and consistency shown by legal marijuana and the marijuana stocks sector. According to ArcView, which is a top cannabis research firm, the growth in sales within North America should average 26% until at least 2021, with the result being up to $22 billion in sales every year. In the meantime, a report from Marijuana Sales Daily, published in 2017, forecast that there should be a growth of 45% in sales of legal weed within the US market in 2018, with the main driver of this boom being the legalization of recreational cannabis sales in California. The major point is that, regardless of the source of the statistics, everyone agrees that the sales of marijuana are through the roof and climbing.
A big reason for the jump in marijuana sales is public opinion. Every survey conducted on the issue agrees that there is strong support for the legalization of recreational cannabis in the US, with even more people showing their support for medicinal use of marijuana. As long as the expansion of marijuana finds popular support among the public, the sales of weed should continue to grow, making it one of the most interesting investment opportunities right now.
Colorado Is on A High
In Colorado, one of the first two states – alongside Washington – to make it legal for the recreational use of pot, aggregate sales of cannabis has continued to rise. After sales that were just shy of $700 million in 2012 for both recreational and medical marijuana, the Rocky Mountain state reported sales figures of $1.49 billion in 2017. What was most notable, however, was that the sales of recreational weed shot up 30% higher in the last year, showing that overall sales were almost 15% higher than in 2016. The state also benefitted from the windfall, securing a massive $257 million in taxes from the sale of marijuana, money that will be used to fund law enforcement, schools and drug-assistance programs.
Somewhat less surprisingly is that Colorado is home to the first city in US history to have managed to sell more marijuana in one year than alcohol. A report from the Aspen Times states that licensed marijuana vendors in the posh ski resort of Aspen ended up selling a total of $11.3 million of marijuana in 2017, in comparison to only $10.5 million in sales for liquor stores.
The data, obtained from the year-end sales tax report of 2017, compiled by the Aspen Finance Department, indicates that the sales of cannabis in the city grew by more than 16% from 2016 and that it enjoyed the fastest growth rate of any of Aspen’s retail sectors. Regardless, cannabis still remains a minor player in the city’s $730 million retail industry.
Marijuana Stocks to Look Out For
As many investors know, thousands of people are piling into a quickly emerging market segment that is still at ground zero: the marijuana industry. Just a few years ago, the thought of investing in weed would have been laughed off as a fool’s dream. However, the unthinkable has now become reality. In a similar vein to alcohol companies’ stock after the Prohibition, marijuana stocks are quickly coming into the limelight.
Legal marijuana sales are still in their infancy, but the business in the drug is now booming. While the marijuana industry continues to experience some instability, there are some marijuana stocks that investors need to take seriously and buy into right now:
GW Pharmaceuticals (GWPH)
Biotech firm GW Pharmaceuticals, which has its headquarters in the United Kingdom, has become one of the biggest marijuana investments available, gaining worldwide attention for Epidiolex, a marijuana-based anti-epileptic medication. So far, the drug has proven to be a success, with patients using it reporting 39% fewer seizure episodes than before, a statistic that all but confirms the efficacy of cannabinoids – which are the chemicals found in marijuana.
In addition, the FDA has given GW Pharmaceuticals exclusive rights to use Epidiolex – a treatment used to combat tuberous sclerosis complex (TSC) – for seven years. TSC is a rare disorder that has been linked to a large number of epilepsy cases. This exclusivity is referred to as ‘orphan status’ and is granted to companies that produce drugs to treat rare diseases. Yet another of the company’s cannabis-based medications, Sativex, has been approved for the treatment of multiple sclerosis and cancer in Europe and New Zealand.
With the company having plenty of cash on hand and nearly no debt, GW Pharmaceuticals is set to increase its investments in research and development of new marijuana-based drugs, with each breakthrough likely to result in a rise in its stock value.
AbbVie, Inc. (ABBV)
AbbVie is a top marijuana stock that markets a leading marijuana drug known as Marinol. The company is a leading marijuana stock that has been reporting increasing revenues for four straight years. This is beside its operating income that has been on a continuously upward trajectory.
Marinol, a drug that has been approved by the FDA, is medication that helps to steam vomiting and nausea among chemotherapy patients, while stimulating hunger in AIDS patients. However, Marinol is markedly unremarkable in terms of its earnings. As a matter of fact, it is not even one of AbbVie’s top selling drugs. The company’s bottom line continues to be padded by a host of different drugs besides Marinol.
Unlike many top pharmaceutical companies, Abbvie has placed its focus exclusively on the US market. This is a risky strategy since this marijuana-based company’s stock is highly dependent on the domestic value of its drugs.
Insys Therapeutics, Inc (INSY)
In spite of having a so-so record in the last three years and having its operating income taking a sharp nosedive at the beginning of 2017, Insys Therapeutics continues its work on a new synthetic cannabis treatment to combat juvenile epilepsy. The company has also launched yet another marijuana-based drug known as Syndros, which helps to mitigate weight loss as a result of AIDS as well as nausea from chemotherapy.
Although Insys markets a host of marijuana drugs, the company has undergone a financial slump in the past few years, with operating income dropping drastically in 2016 in spite of higher profits than the previous three years. Also, the firm has had legal troubles, with the Arizona state attorney suing the company for fraud connected to a marketing campaign that it launched for Subsys, an opioid-based painkiller.
As is normal with biotech stock, this marijuana-based company’s share price is extremely volatile. Still, in spite of its problems, many experts predict that this marijuana stock is set to outpace the industry’s projected growth rate of 26% by posting a 28% growth in earnings within the next 5 years.
The Scotts Miracle-Gro Company (SMG)
Based in Maryville, OH, this marijuana stock specializes in lawn and garden products. It is now venturing into the pesticide business, by developing a range of pesticides targeted at marijuana growers. The firm has also come up with a string of products targeted at people who grow their own hemp.
Scotts Miracle-Gro has definitely placed its focus on a long-term goal of making a niche for itself in the weed market-and Wall Street has sat up and taken notice.
In fact, the company has spent millions of dollars acquiring many smaller marijuana businesses. Although the marijuana industry has traditionally had to exercise caution when it markets itself to the general public, Scotts Miracle-Gro, through Black Magic – a hydroponics company which promotes soil-less plant growth – has managed to get its products into more than 165 Home Depot stores.
Aurora Cannabis (ACB)
Aurora Cannabis was one of the most successful marijuana stocks in 2017, with the company recently launching a range of edible marijuana products. In addition, it is hard at work establishing itself in Europe. As a matter of fact, Aurora Cannabis recently acquired a leader in the German medical marijuana market, Pedanios GmbH, to establish its footprint on the continent.
Aurora Cannabis has also constructed a cannabis greenhouse in Calgary. This major marijuana stock has extended its reach into Australia, by taking a 20% stake in the country’s largest marijuana factory.
Legal marijuana is viewed by many investors as a multi-billion-dollar industry, especially now that 29 states in the US allow for the use of marijuana in one form or another. Market estimates indicate that marijuana will generate some $29 billion in annual sales by 2021. The recently passed law in California that allows adults over 21 years of age to possess as much as an ounce of marijuana and grow up to 6 marijuana plants at home, will only serve to fuel greater demand.
The companies that have positioned themselves to take advantage of the new legislation are poised to be great buys in 2018.