Canada plans to legalize recreational marijuana later this year. Anticipating this new market, investors are looking for marijuana stocks to invest in. Two exchange-traded funds can help investors find viable options: The Horizons Marijuana Life Sciences ETF (OTC:HMLSF) in Canada, and the Alternative Harvest marijuana ETF (MJ) in the United States.
Thus, whether you are interested in marijuana stocks in Canada or marijuana stocks in the USA, resources can help you find the best investment option for your portfolio.
These exchanges provide exposure to the marijuana market, but unlike more traditional stocks, these have a hedge for investors who may not have the financial access to funds that would allow someone to obtain a significant stake in individual marijuana stocks.
The recent market pullback, which dovetailed with the Canadian marijuana market tumbling earlier in February, has not hindered progress.
Instead, it has created unique buying opportunities that could benefit investors who but marijuana stocks. On February 5, the Alternative Harvest ETF fell from a high of $39.72 to a low of $28.90; previously, the ETF had grown from approximately US$5 million to US$400 million.
In December, founder and CEO Sam Masucci launched the Alternative Harvest ETF.
However, they recently learned that other countries, including Canada, are not immune to market risk. This is demonstrated by the decrease in many Canadian marijuana stocks in recent weeks. The Alternative Harvest ETF switched its ticker on February 9, and since then it has responded much more favorably in the market, recovering by as much as 4% within a few days.
Nevertheless, the Alternative Harvest ETF might have risks outside of the market.
According to reports, U.S. Bancorp is actively reviewing whether it will remain the fund’s custodian. If U.S. Bancorp pulls out on the ETF, and if Alternative Harvest can’t find a new custodian, the Alternative Harvest ETF
The good news is that, if the worst happens and the Alternative Harvest ETF fails, this will not necessarily negatively impact the cannabis industry as a whole.
Other issues, however, impact the cannabis industry. Canada’s recent announcement that it would be pushing back legalization to “later in the summer,” along with the general market pulling back, caused a bit of panic to reverberate through the market. This resulted in many Canadian marijuana stocks dropping to lows last seen in late 2017.
The US Alternative Harvest ETF holds more US-based companies involved in biotech than its counterpart.
The US Alternative Harvest ETF holds, among others, Altria Group (MO), Arena Pharmaceuticals (ARNA), Corbus Pharmaceuticals (CRBP), Cara Therapeutics (CARA), Cannimed Therapeutics (OTC:CMMDF), Emerald Health (OTCQX:EMHTF), GW Pharmaceuticals (GWPH), Insys Therapeutics (INSY), Scotts Miracle-Gro (SMG), Philip Morris (PM), and 22nd Century (XXII). This, of course, impacts what investors know and how they assess marijuana stocks.
Other companies take a “fund approach,” without forming an actual ETF.
One example is Rockshield Capital Corp (OTCPK:CRUOF). Founded in 2007, Rockshield recently invested into some of Canada’s emerging small cap companies, including both public and pre-IPO businesses. Rockshield has made a total of 20 investments so far, with a “cash and investments” value estimated to be $15 million.
Interestingly, Rockshield recently invested in companies in the cryptocurrency/blockchain and neuroscience industries, in addition to the cannabis industry. Although Rockshield has a number of investments, it focuses a great amount of attention on marijuana stocks.
Cannabis market investors are also expressing interest in MedMen, a Los Angeles-based company choosing to do a reverse merger in the Canadian market rather than do an IPO in the states.
Daniel Yi, MedMen company spokesman, explained that MedMen was choosing the Canadian Stock Exchange rather than something like the OTC Marketplace because, “It’s where companies like Canopy and MedReleaf have been able to raise lots of money.” This makes MedMen an intriguing marijuana stock.
MedMen currently has 18 facilities employing 700 people in three states. The company operates scalable growing facilities and retail stores, which are notable for seeming more like an Apple store than a marijuana dispensary. This might appeal to Millennials who value the Apple aesthetic.
The Canadian legal marijuana market will have to wait until a little bit later than originally scheduled for legal recreational weed to be available.
Nonetheless, once this law goes into effect, Canada will be the second country–after Uruguay–to have nationwide legalization. This spells massive opportunities for investors interested in buying marijuana stocks. The Canadian market has also attracted US companies, which then choose to go public on the foreign exchange instead of a traditional US IPO. These maneuvers can give us insight into the potential future of marijuana stocks.
However, the legal marijuana market is still relatively young, in fact, the overall potential for the marijuana industry to outpace the market may already be occurring.
The North American Marijuana Index shows that marijuana stocks have seen a market increase of more than 125%. This number is striking when compared to the S&P 500’s 22% increase over the last 12 months.
Is this the year that marijuana stocks find its place in a mainstream spotlight? Only time will tell. Nevertheless, this is a great time for interested individuals to investigate marijuana stocks to buy now.