Investing in Marijuana – Back to the Basics

The outlook for the US cannabis industry has never looked better. A recent report from Nielson, an industry-leading research firm, predicts enormous sales growth in the next five years.

In 2018, we estimate that total sales of all legalized cannabis in the U.S. reached $8 billion. With newer recreational markets such as Michigan and Illinois opening up for business in 2020 and more states likely to follow suit, we predict that sales of all legalized cannabis in the U.S. will reach $41 billion by 2025.

This big growth projection has everyone from self-directed newbie traders to hedge fund managers scrambling to invest in the cannabis industry.

While the big players once overlooked this sector, a shift in sentiment is giving the cannabis industry credibility. This new support will help drive stock prices and trading activity higher.

In the last 12 months, dozens of cannabis companies have gone public. Currently, hundreds of cannabis-related stocks are trading on the major US and Canadian stock exchanges.

From growers to cannabis-centered real estate operations, accessory manufacturers to lighting companies – strong opportunities are found in every cannabis subsector.

Favorite Weed Stocks By Category

Our favorite cannabis companies have competitive advantages that set them apart from their peers. Their advantages indicate that they are in position to dominate the industry.

Below are companies with first-mover advantage, early industry leadership, top-tier management, sustainable revenue growth, and strong technical chart setups.

Medical Cannabis Stocks

GW Pharmaceutical (NASDAQ: GWPH) is the largest cannabis biotech in the world with a market cap of $3 billion. GW’s new cannabis drug Epidiolex has a shot at becoming the first-ever cannabis blockbuster drug (a drug that generates more than $1 billion in sales a year).

Cannabis Edibles

Plus Products (CSE: PLUS , OTC: PLPRF) is the #1 cannabis edibles company in California. According to BDS Analytics GreenEdgetm Platform, Plus sold the most cannabis edibles in California in the last twelve months by both units and dollars.

Cannabis Accessories/Tools

Greenlane Holdings (NASDAQ: GNLN) is a direct play on the US cannabis vaping industry as the largest wholesaler of vaporizers and vaping accessories in the country.

Cannabis Cultivation

Trulieve Cannabis Corp. (TRUL) is one of the largest integrated cannabis companies in the US with a market value of $1 billion. Trulieve currently operates 31 dispensaries in Florida with plans to grow to 35 in the next 12 months.

Cannabis Property & Real Estate

Innovative Industrial Properties (NYSE: IIPR) is the cannabis landlord, leasing cannabis cultivation facilities to some of the largest growers in the country. An early industry leader with a market cap of $1.1 billion. IIPR is one of the only cannabis companies that pay a dividend, offering a current yield of 2.4%.

If you’re ready to invest in cannabis stocks, you need to open an account at a brokerage firm. Selecting the right brokerage firm is a critical part of successful investing. But it’s even more important in the cannabis sector.

Finding A Broker to Trade Marijuana Stocks

Using the right brokerage firm is critical to succeeding in cannabis stocks.

In fact, there is one critical feature that is more important than any other.

Many of the best US cannabis stocks trade on Canadian stock exchanges such as the Toronto Stock Exchange (TSX) and the Canadian Securities Exchange (CSE). That’s why it’s critical to use a brokerage firm that offers access to these international exchanges. With lack of access, you could miss out on some of the best opportunities.

In addition to finding a broker that gives you access to international exchanges, you should also find one that offers low-cost trades.

A discount commission scale is important for two main reasons:

1. Trading cannabis stocks requires more activity than traditional buy and hold investing.

2. Some of the best cannabis stocks trade for pennies. Many investors may end up buying tens of thousands of shares.

A discount brokerage firm, like the ones listed on our FAQ page, will offer the best rates to keep costs low.

Keep in mind that there is no “one size fits all” when it comes to brokers. You will need to weigh your needs against the broker’s offerings to find the best fit.

Michael Vodicka owns shares of Innovative Industrial Properties (IIPR).


About the Author

Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.