The reason why marijuana stocks are a very good investment opportunity is twofold. First – and this is probably the reason you ended up here – the marijuana stock market is getting more mature. The first companies in the market have been around for quite some years now and start to lose their start-up attitude. This makes the marijuana stock market as a whole somewhat more reliable to invest in.
Second, as you have undoubtedly noticed, more and more states in the United States are approving legalized weed and medical marijuana or are on the verge of approving it. As support for legalizing pot for medicinal and recreational purposes is gaining momentum, investing in this market could be very beneficial. The combination of these two factors makes sure that the more established companies in the marketplace are looking at an opportunity to hugely increase their geographical presence and thus increase their revenue and profits significantly. But it also increases chances for the successful entry of newcomers in the marketplace. While writing this article, 29 states and the District of Columbia have laws in place that legalize the use of medical marijuana. Moreover, it is legal to use marijuana for recreational purposes in eight states, with Delaware looking to legalize recreational pot in 2018.
And the beauty of it is; unlike other stock markets the marijuana stock market as a whole is growing significantly. The pace at which the market is growing has already attracted lots of investors. Many of which saw their investment double over a trailing 12-month period. Considering an estimated $6.9 billion in legal weed sales over the course of 2016, the market is already of significant size. But most interesting is not what the legal market already entails. It is the illicit market that is worth considering when deciding whether you should invest in the marijuana business. By most estimations, $46 billion of sales were conducted on the black market. That is the true market potential when more states will come to legalize the drug and federal laws will hopefully this wave of legalization.
Another part of the industry is comprised of pharmaceuticals. With the first FDA-approved cannabis-based drugs already out there, dozens of traditional big pharma’s and industry newcomers have pipelines full of treatments based on marijuana extracts. By closely following announcements of their clinical trials’ successes and failures, you can tip the scales in your favor. The rest of the companies in our list of marijuana stocks are not directly in the marijuana industry but are strongly attached to its success. These are companies in the value chain such as packaging and branding business and companies in the business of equipping weed growers. Do note that investing always comes at a risk, so never invest more than you could spare to lose.
So to help you find your way through the vast array of marijuana stocks, here are our top picks in the marketplace to watch right now.
- 1 #1 ABBV – AbbVie, Inc Weed Stocks
- 2 #2 SMG – Scott’s Miracle-Gro Cannabis Stocks
- 3 #3 CRBP – Corbus Pharmaceuticals Marijuana Stock
- 4 #4 INSY – Insys Therapeutics, Inc.
- 5 #5 GWPH – GW Pharmaceuticals
- 6 #6 KSHB – Kush Bottles, Inc.
- 7 #7 ACBFF – Aurora Cannabis
- 8 #8 WEED – Canopy Growth Corp.
- 9 #9 APH – Aphria Inc.
- 10 #10 CARA – Cara Therapeutics
- 11 #11 AXIM – Axim Biotechnologies
#1 ABBV – AbbVie, Inc Weed Stocks
AbbVie, Inc. is a research-driven company in the health industry of marijuana stocks. A biopharmaceutical company apparently very young, but actually it became separated from Abbott, a health care industry giant, in 2013. Abbvie, Inc. has a serious advantage over its competition because it already has a cannabis-based drug, MARINOL, on the market. MARINOL is FDA approved and harnesses some specific known marijuana effects. It helps patients with chemotherapy overcome their vomiting and alleviates nausea. MARINOL also instigates people’s desire to eat, which comes in helpful with AIDS patients for example, who have lost their desire to eat.
Because AbbVie has a lot broader portfolio of drugs on the market, with MARINOL not even being the company’s flagship drug, it is less affected by fluctuations specific to the marijuana market. On the other hand, this in-company diversification makes upticks in the marijuana trend less pronounced in the company’s stock price. In other words, it is a more safe investment because the intrinsic value of the company does not solely depend on marijuana. This means all fluctuations in the marijuana industry have a reduced effect on the company’s stock price.
In general, a more company-specific risk for this marijuana stock, is that AbbVie operates in US markets almost exclusively and so has no real intrinsic geographical diversification.
#2 SMG – Scott’s Miracle-Gro Cannabis Stocks
Scotts Miracle-Gro is a marijuana stock that focuses on the production segment of the marijuana stocks. It has specialized in products which help cannabis growers with lawn and garden care. The company has also developed several pesticides, which can of course also be used for the cultivation of marijuana plants.
It suffices to say that marijuana stock prices are most influenced, from a legal point of view, by the legalization of the cultivation of marijuana. While more and more states have experienced a cash influx due to the legalization of cannabis, the big marijuana stock investments in industrial scale cultivation still are being held back by federal law. Especially now President Trump has announced some reversing some marijuana laws. Scotts Miracle is focusing however on the cultivation and thus enablement of marijuana growers. It recently started selling off parts of their historical core operations in traditional consumer lawn and garden business. Their new subsidiary Hawthorne’s focus on hydroponics, combined with the acquisition of two Netherlands-based companies in the indoor lighting business, strongly suggests a strategic move into marijuana growing business. The combination of the two is an ideal proposition to equip cannabis growers. This strategic move is explainable given the rumors that the Trump Administration will not be focusing on medical marijuana growers, making Scotts Miracle-Gro an interesting marijuana stock.
Recent price volatility combined with a steep drop in marijuana stock price at the end of 2016 makes it a difficult investment at the moment. In other words, Scotts Miracle-Gro has a great potential, but for the moment it could be wiser to closely follow watch it than to actually invest heavily. Announcements of more liberal marijuana laws could turn things around very quickly. Especially when addressing the medical marijuana business, instead of the more recreational focused market.
#3 CRBP – Corbus Pharmaceuticals Marijuana Stock
As the name suggests Corbus Pharmaceuticals operates in the pharmaceutical domain. As it has no products in the market yet, this marijuana stock is more volatile than the more established marijuana stocks in our list. Moreover, investors who are looking for a long-term investment must understand that due to the lack of an actual product in the market, Corbus Pharmaceuticals’ revenues are very close to zero, with a negative operating income. This means that for the time being, no dividends will be paid on this marijuana stock.
Corbus Pharmaceuticals is formed around the development of a marijuana-based drug, called Anabasum. Which is proving to be the very promising in all the clinical trials thus far. Anabasum, formerly known as Resunab or JBT-101, has proven positive results in two Phase 2 studies aimed at the treatment of Cystic Fibrosis and Systemic Sclerosis. The synthetic endocannabinoid-mimetic (oral) drug is designed to treat chronic inflammation and also fibrotic processes. Two other Phase 2 studies aimed at Dermatomyositis and Systemic Lupus Erythematosus are in progress.
Corbus Pharmaceuticals’ stock price has historically shown to take a dip just before the results of a trial are announced, reflecting the increased perceived uncertainty. As can be expected, the marijuana stock price tended to go up after the announcement brought positive results. As an investment strategy, a typical ‘buy low, sell high’ seems to be a sound strategy. But mind you that there’s no certainty in positive trial results, so the typical rally after the announcement of trial results is not a given. Moreover, Corbus Pharmaceuticals’ stock showed some dramatic volatility over the past year.
#4 INSY – Insys Therapeutics, Inc.
Like AbbVie, Inc. the portfolio of Insys Therapeutics, Inc. entails many non-cannabis-based drugs. Because of this, it is a more diversified company than other marijuana stocks in our list, which are solely focused on marijuana. Subsys is Insys’ major, non-cannabinoid-based, revenue driver for the past few years. It actually is the most important reason Insys Therapeutics has been stably profitable since 2013. Subsys is a spray which is applied under the tongue of adult cancer patients, to help them deal with constant pain.
Syndros is the companies cannabinoid-based drug which has been approved by the FDA. It is a pharmaceutical synthesis of the psychoactive part of cannabis, better known as THC. The drug was FDA-approved in July for treatment of nausea and vomiting of chemotherapy patients and as a stimulus of patients’ desire to eat who suffer from AIDS or anorexia. In essence, it is similar to, and a competitor of AbbVie’s drug MARINOL. Analysts at Piper Jaffray consider the annual sales potential of Syndros to double Insys’ revenue with the recent introduction of Syndros.
Apart from having Syndros in the market, Insys Therapeutics has a promising pipeline. It is said to have intentions for filing a new drug application for a buprenorphine spray, which is used for patients recovering from opioid dependencies. Moreover, it is in a far stage of testing a cannabis-based solution for childhood epilepsies.
Insys Therapeutics shows promising potential with all the developments in their cannabinoid-based drug portfolio. While also having a steady income stream generated by their non-cannabis-based drug Subsys. There is a risk associated with investing in Insys though. There have been filed a number of lawsuits against Insys for allegedly using inappropriate marketing strategies for Subsys, causing a sharp revenue drop at the end of 2016. But as soon as these lawsuits will be resolved Insys Therapeutics is definitively an intriguing medical marijuana stock.
#5 GWPH – GW Pharmaceuticals
GW Pharmaceuticals is the biggest marijuana stock among the marijuana stocks. With a market cap of almost 3 billion this British pharmaceutical is a true giant among the medical marijuana stocks.
GW Pharma already has one drug in the market, which is approved in a large part of the European Union. The drug, called Sativex, is used in the treatment of MS. The company also put Sativex through a phase 3 trial, aimed at the treatment of pain in cancer patients. Unfortunately, the drug failed in this respect in their late-stage studies, forcing GW Pharmaceuticals to abandon this path. Apart from Sativex, GW Pharma has a vast array of medicines in its pipeline. The majority of which is in clinical trials, exploring the treatment of childhood spasms, glioma, tuberous sclerosis and more. The most promising medication at the moment is an experimental drug, Epidiolex.
Epidiolex has finished two phase 3 trials, showing the significant effect on two rare types of infantile epilepsy. In treating Lennox-Gastaut syndrome, Epidiolex showed a 50% seizure reduction. In the other phase 3 trial, a 39% reduction in seizure frequency was found in a study aimed at the treatment of Dravot syndrome.
Although GW’s impressive pipeline and phase 3 trial studies of Epidiolex showing promising results, there are some aspects that are less favorable from a buying perspective. GW Pharma indeed has a huge market valuation, but this is for the moment mostly based on the promise of its pipeline. This enabled the company to generate capital for further investments, but there is no underlying operating profit to sustain the share price. As a matter of fact, it burns through is cash rather fast (last year around $125 million). For the moment this would be a stock to keep your eyes on, but I would suggest keeping your money in your pocket, at least for now. Looming FDA approval of Epidiolex does make you want to closely follow the news on this stock. This could tip the scales in your favor and make you decent capital gains in the short term. Long-term investments would start to be favorable once this marijuana stock gets a more solid portfolio of marijuana-based drugs approved by the FDA for the US market.
#6 KSHB – Kush Bottles, Inc.
Kush Bottles is a marijuana stock in another part of the value stream than most other marijuana stocks on our list. It focuses its operations on equipping cannabis producers with products for packaging, branding and other accessories.
From a legalization point of view, it is a very interesting marijuana stock. On the one hand, it is indirectly tied on the wave of legalization of the marijuana industry as a whole. Being dependent on companies that grow and sell marijuana, the bigger the cannabis market, the bigger Kush Bottles’ potential. This dependency makes it somewhat vulnerable to the Trump administration’s statements on the cannabis industry. On the other hand, the company’s portfolio is not governed by any state or federal cannabis laws. This makes Kush more agile in shifting their focus from equipping recreational oriented business to the medical-focused part of the marijuana stocks.
Their market capitalization is somewhere around $110 million, which is very reasonable given the fact that is traded over the counter. Whereas most other marijuana stocks on our list are traded on major exchanges, mostly on NASDAQ. This is very important to emphasize because these types of marijuana stocks are not required to report quarterly financial statements or other regulations that are typical for the major exchanges. Typically such a stock is better positioned in the more speculative part of your portfolio.
#7 ACBFF – Aurora Cannabis
Aurora Cannabis is in the business of growing marijuana. Based in Canada, its main competitors for the Canadian cultivation market are Canopy Growth Corp. and Aphria Inc. Currently holding second place with a market cap of $743 million it’s half the size of its biggest competitor Canopy Growth Corp.
The reason Aurora is higher on our list of marijuana stocks than the largest marijuana-producing company, Canopy, is because of their announcement late 2016. In November of that year, it began construction of “Aurora Sky”, a humongous new hybrid greenhouse facility of Dutch design in Leduc County, Alberta. The facility will have a size of a never-seen-before 800,000 square feet. In comparison, thus far this marijuana stock generated profits from a facility in Mountain View County, Alberta nearly one-sixteenth of its size. On top of that, Aurora has approved the option to expand the latter facility.
With their new, state-of-art facility management is designed with a system with high levels of automation. This should enable a high consistency in production volume and quality. But more importantly, it will provide an extremely low cost per gram of weed produced, according to management. The completion of the new facility is planned in October 2017.
Aurora Cannabis is there for a very interesting stock to invest in. In the short term, the opening of the facility may convey a small risk to get everything running smoothly. But for a long-term investment in marijuana stocks, Aurora is aiming at the top spot in the Canadian cannabis growing market. With its substantial operating expansion, it looks very promising for Aurora’s stockholders.
#8 WEED – Canopy Growth Corp.
Canopy Growth Corporation is the biggest player in the market of marijuana production. While its production is based in Canada, it is looking to expand to a more global focus. Having started to export to Germany via its subsidiary, Spectrum Cannabis, it recently has also closed deals to start exporting to Chile and Brazil.
This is the company’s strategy to ‘try out the market’, so to speak, and on the other hand, drive the market by helping to remove market impediments. In most countries where the legalization of cannabis for medical purposes just took off, there is a tendency of initial reluctance among physicians to prescribe weed as a proper medicine.
Although a very sound and reasonable strategy, Canopy is also exploring other ways to explore ways of entry in countries’ marketplaces. In Australia, it has taken a ten percent stake in Auscann Group Holdings Ltd in exchange for the use of Canopy’s cultivation and production techniques. An even more interesting move has been the acquisition of Mettrum Health Corp late 2016. Being the second largest producer at the time, Canopy significantly increased its market share and thereby its market capitalization. However, analysts have been critical of the 42% premium Canopy paid at the time.
Being the global leader in cannabis production, Canopy Growth Corp. is definitely a marijuana stock to watch. Given its global diversification, it is also a very sound long-term investment in the medical marijuana stocks. Their strategy is somewhat risk averse, by serving markets abroad from their Canada based operation. This also comes at a cost from a logistics’ perspective. For the short term though, Canopy is trading at relatively high valuation, according to financial analysts. It thus may be wise to see the management take a more cost-focused strategy to boost margins and capitalize on its market share.
#9 APH – Aphria Inc.
Aphria is among the top 3 players in the market of the production of cannabis. Just as Canopy Growth and Aurora Cannabis, Aphria holds a license to cultivate and sell medical marijuana in Canada. With a cost structure that is more beneficial than its major competitors and a significant expansion of their greenhouse facility, it is a marijuana stock to watch.
Interestingly, Canada is not the only market Aphria targets its efforts to. It has acquired stakes in Copperstate Farms, an Arizona based medical marijuana provider, and recently in Chestnut Hill Tree Farm, which operates its cannabis growing business from Florida. Unlike Canopy, Aphria has yet to enter the German market, which legalized medical marijuana in March 2017. But management states that Germany is on the company’s radar.
Apart from geographical expansion, Aphria will finalize the fourth stage of expansion of its greenhouse facility mid-2018. This is expected to drive the company’s cost per gram of weed further down, making its product more competitive. This fits the company’s long-term strategy to realize market share through cost-effectiveness.
Because true competition in the marijuana market is not only driven by legal producers but for a large part is also generated through the distribution of illicitly produced marijuana, cost-effectiveness is a strong strategy. Aphria is, therefore, a very reasonable long-term investment, especially given their continued production facility’s expansion.
#10 CARA – Cara Therapeutics
For the more experienced investor in marijuana stock or close follower of medical marijuana business, a place for Cara Therapeutics may come as a surprise. Up until June 2017, Cara was trading at a very promising price. But just shy of a billion-dollar valuation, stock prices plummeted.
Cara’s much-anticipated treatment for chronic pain and pruritus, or itching, showed poor performance in their second phase of clinical trials. Because the market for chronic pain treatment is very profitable and the results of phase 2b of CR845 were not anticipated by the market, investors were quick to cut their losses. In two weeks’ time, Cara Therapeutics was more than halved in value.
Still trading at marginally more than after the plummet, there could prove to be a pot of gold at the end of the ‘down-hill rainbow’. Along with the news that the oral doses of their pain medicine, CR845, failed to show statistical significance, a hopeful announcement was made as well. In phase 3 of clinical trials, Cara Therapeutics is testing an intravenous version of their drug. Cara reported that the Independent Data Monitoring Committee (IDMC) recommended continuation of the trial. However not equal to true success, this statement by the IDMC may very well indicate that Cara is on the verge of having a potentially very profitable drug in their pipeline.
Moreover, data showed that the other part of the trial, involving intravenous treatment for pruritus associated with chronic kidney disease, also showed promising initial results. This type of pruritus is momentarily not covered by any FDA-approved therapy in the United States. So CR845 may actually prove to be quite a profitable treatment after all.
Going long in Cara Therapeutics is therefore definitively riskier than it appeared to be early 2017. But trading at a much lower price, this could prove to be a rather profitable medical marijuana stock after all
#11 AXIM – Axim Biotechnologies
For those of you who are more experienced in marijuana stocks or biotech stocks, Axim Biotechnologies is a familiar name. Investors that held a position in Axim at the beginning of 2016 saw their investment skyrocket over the course of that year. Axim Biotechnologies’ stock price grew by a staggering amount with a yearly growth of over 2000% percent. Expectations for its cannabinoid products and treatments in their pipeline were the main driver for this enormous growth.
In 2017 though, it hasn’t performed as good as the previous year and stock prices were going up and down. The lion’s share of Axim Biotechnologies pipeline is formed around their cannabidiol-based chewing gum products. June 23, 2017, they filed a patent for their chewing gum, which helps in the treatment of opioid addiction and can also be used as a treatment for patients with chronic pain.
Furthermore, the pipeline of Axim contains more promising products. A phase 2 study, sponsored by Wageningen University in The Netherlands, is researching a chewing gum aimed at the treatment of irritable bowel syndrome. In addition, an early stage study should be finished by the end of 2017. In this study, the use of Axim’s cannabidiol chewing gum is tested in treating various diseases. Most importantly are its suggested effects on spasticity and pain associated with multiple sclerosis. Axim Biotechnologies aims at completing a phase 2 and 3 clinical trial over the course of 2018, if results of their early stage study at Free University of Amsterdam, The Netherlands continue to be positive.
Other research and clinical trials are being carried out in cooperation with numerous renowned universities. Axim’s pipeline contains possible treatments for ADHD, psoriasis and Crohn’s disease among others. The company’s pipeline looks indeed promising. From an investment perspective, last years explosive growth may give caution for the moment. There are no guarantees that Axim Biotechnologies’ pipeline is going to deliver the degree of success that seems to be incorporated in its stock price. For now, it is advisable to closely follow the news around their clinical trials before investing in this marijuana stock.
Hey guys! My name is Anthony Ellsworth and I am passionate about nature and everything it has to offer. Since I was still a kid I always felt a strong connection with nature and the urge to explore. This passion has led me to study biology later on in life and lots of exploring. Now, together with my beautiful wife Jennifer, it has become our goal to share all the knowledge that we have built up together through the years. If you have any questions or what so ever feel free to ask them anytime!