I am not a weed smoker myself, but I live in a state where it has been legal for medicinal use for a while now and it recently became legal for recreational use, so I know many who do smoke or consume it in other forms and I know that it has great medicinal potential as well as a recreational drug that is a good alternative to alcohol. Although the legalization of recreational use has lowered the price since there is so much competition, for many people it can still be an expensive habit. And now, instead of all those profits going into the hands of the drug dealers in the communities, it can go to actual legitimate companies – companies that you can invest in to ride the weed wave and get your portfolio high! Every time new legislation passes that legalizes marijuana the sector enjoys a nice surge, and in the past few years there has been a lot of different places legalizing it in one form or another. There are many aspects to the marijuana economy – including the companies that provide equipment and supplies to grow it, the companies that grow and process it, the storefronts where it is sold, and even all the companies that make everything for the weed culture like pipes and rolling papers. There are many companies that are seeing the uptick in profits after the legalization in many states and it is only going to continue to grow from here. More and more states are going to legalize it, either for medicinal or recreational use, and that means more people buying it through legitimate channels instead of on the street. But if you want to really find that hidden gem of a stock, then you’ll need research the individual companies that deal with each link of the marijuana chain. Just like any industry, there are companies that make the equipment and supplies for production, the companies that produce it, companies that sell it, companies that sell devices and accessories to use the product, companies that consult and provide other services to the producers, and companies that deal with other aspects or multiple aspects of the sector. Except instead of making and selling widgets, the marijuana industry grows their product. Here is a list of companies that deal with each different aspect of the marijuana industry that I put together from a few different sources that I think have the best potential for the future.
First of all are the companies that sell the products for growing weed. Unlike decades ago, marijuana production is now highly methodical, requiring special equipment and products to get the best quality and highest yield possible. Even though it is just a plant, most marijuana is not grown outside, or even in soil for that matter. Most growers do it inside with artificial lights and hydroponic systems that immerse the plant’s roots in water. That means that a lot of equipment is needed to grow marijuana. Equipment like high intensity grow lights, water pumps and valves as well as other hydroponic equipment, soil, nutrients, fertilizer, etc. Just like in a vineyard, the better taken care of the plant, the higher the quality of the end result – meaning that the best weed comes from plants that are babied with super bright lights, the perfect amount of water and nutrients, proper amounts of CO2, and kept free from fungus and pests. So that means that the companies that make and sell these products are looking to make huge gains in the future as they are the backbone of the marijuana industry. Some of the companies that are in this category include: Scott’s Miracle Gro (SMG), AeroGrow (AERO), Fusion Pharm (FSPM), GreenGro Technolgies (GRNH), Cabinet Grow (CBNT), EffTec (EFFI), Future Farm Technologies (FFRMF), GreenGrow (GRNH), Grow Solutions (GRSO), GrowGeneration (GRWG), Heliospectra (HLSPY), Solis Tek (SLTK), Nutritional High Intl (SNRA),
Of course the next link in the cannabis chain is the actual growers. There are some major growing operations going on out there and their plants are treated with the care and attention of a pharmaceutical lab. No contaminants are allowed in and there is very strict security. And that is because marijuana can be a very profitable crop to harvest and a whole crop can be wiped out if something goes wrong. If a problem like fungus, parasites, or other serious problem hits the grow operation it could ruin a whole crop. Whether done traditionally in soil outdoors, or inside with artificial light and hydroponics, these grow operations can make some serious money. And luckily some of the companies involved in growing marijuana are publicly traded, such as: ABCann (ABCCF), Invictus MD Strategies Corp. (IVITF), Medreleaf Corp. (MEDFF), Marapharm Ventures (MRPHF), Maricann Group (MRRCF), Newstrike Resources (NWKRF), Sunset Island Group (SIGO), Canopy Growth Corporation (TWMJF).
Then of course there are the storefronts and delivery services that provide their patients and customers with the final product. These are very large money makers but most are small mom and pop style dispensaries at the moment. But it is expensive to have a weed dispensary, you need to acquire the products, hire security and knowledgeable staff who can be very trustworthy, and don’t forget all the red tape that they must go through to be legal – which takes a lot of time and money because many jurisdictions require large up front fees to even open up a marijuana dispensary, which keeps a lot of the would be’s out of the market and makes more room for the larger established dispensary chains with the money to invest in building new dispensaries. Companies in this area include: Cafe Serendipity (CAFS), Canntrust Hldgs Inc (CNTTF), Diego Pellicer Worldwide (DPWW), Organigram Holdings (OGRMF).
Don’t forget the products and accessories related to the weed culture. You can’t buy weed or hash without having something to consume it with. And nowadays there are so many options it would make your head spin! Just walk into a head shop and you’ll see shelves lined with all sorts of crazy contraptions for consuming their marijuana products. Traditionally people used small metal pipes to smoke, but those are almost extinct in today’s weed marketplace. Now glass is in, and some of the glass pieces made for smoking weed are so elaborate they belong in an art gallery not a head shop. And nowadays the same type of electronic ‘vaping’ contraptions you see people using can also be used for smoking cannabis oil as well. And don’t forget the rolling papers and cigar leaves that people use to roll up joints and blunts with, jars to keep the marijuana in, grinders to grind it up, and other marijuana accessories. There are many companies that belong in this category, such as: Advantis (ADVT), Kush Bottles (KSHB), mCigInc. (MCIG).
Of course, no matter what the business does, they will need a place in which to set up shop and in need of real estate services. With all the regulations and stipulations regarding cannabis based businesses, a real estate company that is familiar with such rules might be of great importance to those businesses. One such company is Innovative Industrial Partners (IIPR), a San Diego based real estate investment firm, that is the world’s first cannabis real estate fund to be listed on the New York Stock Exchange. The company doesn’t deal with the plants or the end products, but will seek to buy commercial and industrial real estate and then lease the spaces to cannabis companies. Others in this category include: AmeriCann (ACAN), Agritek Holdings (AGTK), Grow Condos (GRWC), Innovative Industrial Properties (IIPR).
Although marijuana has recently become legal for recreational use in many jurisdictions, the main use remains medicinal. Many companies out there specialize in medicinal uses for marijuana, which differs from recreational use marijuana in the fact that the strains are bred specifically to target certain medical conditions while minimizing the intoxicating effects. Many uses for medical marijuana include anti-convulsion, neuroprotectant, anti-inflammatory, anti-nausea, glaucoma, pain management, and appetite stimulation. Companies that specialize in this area include: Auscann Group Holdings (ACNNF), Cannabis Science (CBIS), CB Scientific (CBSC), Canadian Cannabis Corp. (CCAN), CURE Pharmaceutical Holding Corp. (CURR), CV Sciences (CVSI), Emerald Health Therapeutics Inc (EMHTF), Emblem Corp. (EMMBF), GB Sciences (GBLX), GW Pharmaceuticals (GWPH), InMed Pharmaceuticals (IMLFF), OWC Pharmaceutical Research (OWCP), Tetra Bio-Pharma Inc. (TMPMF), 22nd Century Group (XXII).
Some companies that are in the marijuana sector don’t really fall into any of the above categories. Whether it is consulting, grow op set up, Some of these include: Cannabix Technologies (BLOZF), Bang Holdings (BXNG).
There are also companies that are involved in many parts of the marijuana sector, do business with other companies in the marijuana sector, or companies that don’t deal with the marijuana sector exclusively. These companies are good for a little diversification. This category includes: American Cannabis Company (AMMJ), Abattis Bioceuticals (ATTBF), Axim Biotechnologies (AXIM), Weed Inc (BUDZ), General Cannabis Corp (CANN), Crown Baus Capital (CBCA), Cannabis Sativa Inc. (CBDS), CannaGrow Holdings (CGRW), Cannabis Life Sciences (CLSH), United Cannabis Corp (CNAB), Cannabics Pharmaceuticals (CNBX), CannaRoyalty (CNNRF), DigiPath (DIGP), Earth Science Tech (ETST), EVIO Labs (EVIO), Helix TCS (HLIX), Kaya Holdings (KAYS), Medicine Man Technologies Inc. (MDCL), Medical Marijuana Inc. (MJNA), MJ Holdings (MJNE), Namaste Technologies (NXTTF), Nutritional High Intl (SPLIF), Stony Hill Corp. (STNY).
Or if you aren’t sure where to start, a good marijuana focus mutual fund will cover all your bases. One such fund is the American Growth Fund Series II E (AMREX) which was not involved in the marijuana industry when it was originally established in 2011, but reorganized to focus on the marijuana industry in July 2016. Another is the Tierra XP Latin America Real Estate ETF (LARE) which recently transitioned from a real estate investment trust, the new ETF will track cannabis cultivators, producers and distributors, along with cannabinoid drug makers, fertilizer producers and tobacco companies.
If you’re like me and you think that marijuana stocks and funds have a good outlook in the future, check out the ones listed above and due your due diligence in researching them. I currently do not own any shares of any companies or the fund that I mentioned but am currently doing my own personal research and plan on investing in at least one in the near future.