Medical Cannabis

Advantages of investing in medical cannabis

  • Variety of investment options: the medical cannabis market is wide, from its production, through secondary industries of tea, vapors, pills and food that focus on its active ingredient, THC, to its direct marketing to the consumer.

  • New, expanding market: as it is a relatively young market -due to its recent legalizations-, its continued expansion will benefit early investors in this industry to a greater extent.

The Marijuana Sector: An Overview

Growing Demand

Legal marijuana companies are able to leverage one important advantage, which makes them slightly different from those in the tech sector. While tech companies often need to create demand or to educate their consumer base, marijuana startups face no lack of demand—especially in North America. Investors who once backed tech firms are now funneling capital into the cannabis industry. PayPal co-founder Peter Thiel's Founders Fund became the first institutional investor to put money into the legal marijuana industry. The fund was the lead investor in Privateer Holding's Series B funding worth $75 million in April 2015. Privateer Holdings has multiple cannabis investments. Snoop Dogg is another notable investor in the industry. The rapper makes no secret of his affinity for marijuana and is the director of Casa Verde Capital, a venture capital fund that invests in cannabis startups. The company's portfolio includes names like Dutchie, Green Tank, and Cannalysis. He's not the only celebrity seeing green. Singer Justin Bieber partnered with California-based Palms to release packs of pre-rolled joints called Peaches in October 2021. Martha Stewart launched her own brand of CBD products, including wellness gummies and oil drops, after partnering with Canopy Growth. Stewart released the line in September 2020.

Marijuana Startups

Venture funding for marijuana startups seems to be pouring in from all directions. Commonly referred to as potpreneurs, marijuana startup leaders are betting heavily on the potential for increased legalization. Weedmaps was founded in 2008 and is based in Irvine, California. It expanded and now has offices in New York, Barcelona, Denver, Tucson, and Toronto. Weedmaps was the first marijuana tech and media brand and provides cloud-based software and data solutions to those within the marijuana industry.13 It also offers an app that connects consumers with dispensaries.14 The company was acquired by Grow One in 2015. Leafly allows consumers to rate and review cannabis strains, kind of like a highly specialized version of Yelp. Created by a trio of former Kelley Blue Book employees, the company started out as a simple side project in 2010. Within a year, it became a full-time enterprise and attracted the interest of Privateer Holdings. The company raised almost $41 million in three rounds of financing. After the 2011 acquisition by Privateer, Leafly expanded with the aim of becoming a place for all types of marijuana users to find out more about everything related to marijuana, including which types of products are right for them and finding the dispensaries that sell what they need. The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal, and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON), and Tilray Inc. (TLRY). Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth. Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have slightly outperformed the broader market. MJ has provided a total return of 33.6% over the past 12 months, above the iShares Russell 1000 ETF's total return of 32.2%

Fastest Growing Marijuana stocks

GrowGeneration Corp. (GRWG) GrowGeneration is a distributor of agricultural products and one of the largest hydroponics suppliers in the country. The company operates retail hydroponic and organic specialty gardening retail outlets. It offers thousands of products, including plant nutrition, farming soils, advanced lighting technology, and hydroponic and aquaponic equipment. It owns and operates 60 retail and distribution centers. GrowGeneration has been on an acquisition spree in 2021, its latest purchases including: Commercial Grow Supply, a California-based hydroponic superstore; and Hoagtech Hydroponics, a Washington-based hydroponic equipment and indoor gardening store. Hoagtech and Commercial Grow Supply marked GrowGeneration's 13th and 14th acquisitions since the start of the year, respectively. The financial terms of the transactions were not disclosed. Ayr Wellness Inc. (AYR.A.CX) Ayr Wellness is a cannabis company involved in the cultivation, manufacturing, and dispensing of cannabis and cannabis-derived products. The company's product portfolio includes flowers, tinctures, edibles, and vape products under brands including Kynd, Sira Naturals, Entourage, Highly Edible, Cannapunch, and Lit Cartridges. Ayr Wellness also trades OTC in the U.S. under the ticker AYRWF. The company recently announced that it has completed its acquisition of Garden State Dispensary NJ LLC, one of 12 vertical permit holders in New Jersey, for total upfront consideration of $101 million. Any earnouts based on exceeding revenue target thresholds in 2022 will be capped at a maximum of $97 million. Jushi Holdings Inc. (JUSH.CX) Jushi Holdings is a holding company focused on branded cannabis and hemp-based assets. The company is engaged in retail, distribution, cultivation, and processing operations. Its brands include: The Bank, focused on plant genetics and cultivation; The Lab, specializing in vape products and concentrates; Nira, a maker of hemp-based CBD products that are physician formulated; Nira+, a producer of medicinal THC products; Sèche, which offers various branded ground and flower cannabis products; and Tasteology, a provider of THC-infused products.20 Jushi also trades OTC in the U.S. under the ticker JUSHF. The company recently announced that it has completed its acquisition of Nature's Remedy of Massachusetts Inc. and certain of its affiliates. Jushi paid total upfront consideration of $91.2 million for the vertically-integrated, single-state cannabis operator. Planet 13 Holdings Inc. (PLTH.CX) Planet 13 Holdings is a vertically-integrated cannabis company engaged in the cultivation, production, and distribution of cannabis and related products. The company currently has operations in Nevada and California. The company offers vapes, edibles, pre-rolls, and concentrates. Planet 13's brands include, Planet 13 Las Vegas, Medizin, Trendi, Leaf & Vine, Purc Coffee, Planet M, Dreamland Chocolates, and HaHa gummies. Planet 13's stock also trades OTC in the U.S. under the ticker PLNHF. Verano Holdings Corp. (VRNO.CX) Verano Holdings is a vertically integrated, multistate cannabis operator. The company produces a wide range of medical and adult-use cannabis products, which it sells through its portfolio of brands: Verano, Avexia, Encore, and MÜV. It owns and operates 11 cultivation and manufacturing facilities and 85 retail locations in a number of states throughout the U.S. The company's stock also trades OTC in the U.S. under the ticker VRNOF. Verano announced in late July that it has agreed to acquire all of the equity interests of WSCC Inc., which does business under the name Sierra Well, for $29.0 million, subject to adjustment. Sierra Well has two major dispensaries as well as active cultivation and production capacity.

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