Whether prepared or not, the pot industry is finding itself in the midst of a growth spurt.
In 2018, the U.S. alone is predicted to see a 45% increase in marijuana sales, according to figures from the Marijuana Business Factbook 2017. The opening of California’s marijuana market to recreational sales certainly helps drive this industry growth considering one of now 9 states where marijuana is recreationally legal and one of 29 states where it is medically legal. Furthermore, cannabis industry sales in the U.S. are predicted to quadruple from 2016 to 2021 to $17 billion, according to this same Factbook.
As pot stocks and sales shoot upward and demand increases, pot companies are reaching for new opportunities to expand through cannabis growing and drug development.
Some new acquisitions are under consideration much like the history-making deal two weeks ago, when Aurora Cannabis acquired CanniMed Therapeutics in the largest acquisition to date (To read more, check out The Top Marijuana Stocks Thus Far in 2018).
The expectation is that this deal will help expand Aurora Cannabis’ production capabilities to levels above 130,000 kilograms annually and, ideally, lower costs of production.
This acquisition and several others of larger companies acquiring smaller growers seem to be signs for marijuana stock investors of where the industry is headed, at least in this consolidation phase.
With this atmosphere of acquisition and consolidation in mind, the following are three hot marijuana stocks to keep an eye on as candidates for buyout:
1. OrganiGram Holdings pot stocks
This New Brunswick-based marijuana grower and developer is a likely candidate for buyout after the acquisition of CanniMed. They recently closed on a bought-deal offering with the purpose of funding the expansion of their one production facility. With this expansion, they plan to more than double the square footage of their facility and more than triple their annual production from 20,000 to 65,000 kilograms. As Canada is poised for nationwide legalization of recreational pot this year, this expansion may be timely for weed stock investors.
In sum, there are several noteworthy assets of OrganiGram as a marijuana stock to invest in. First, the amount of annual output would be enough to attract the attention of bigger growers while still being a manageable and relatively quick financial investment as an acquisition. Secondly, OrganiGram intends to keep production in one location, which keeps expenditures down and makes for an easier acquisition. And, finally, as they expand their offerings to include cannabis oils and extracts, they enter a higher profit margin in comparison to dried cannabis.
2. Emerald Health Therapeutics MMJ stocks
This research-and-development based company, located in Victoria, B.C., also wholly owns its botanical cannabis subsidiary, Emerald Health Botanicals Inc. Like OrganiGram, Emerald Health is moving toward offering cannabis oils and extracts with a higher profit margin. The company has ambitious plans for major expansion at two different growing sites, which may be of note to pot stock investors.
The first growing site is comprised of 25 acres and a 1.1 million square foot growing facility for dried cannabis in an equal-share partnership with Village Farms International. The management team of Emerald Health found a way to lower expenditures by retrofitting a pre-existing facility instead of constructing a new one. This project, known as Pure Sunfarms, has optioned for an additional greenhouse facility in British Columbia with 3.7 million square feet of growing space.
The second growing site could be more of a work-in-progress for potential marijuana stock investors. Emerald Health has plans to build a brand new growing facility on a 32-acre plot that, when finished, could offer growing potential up to 1 million square feet.
3. Cara Therapeutics cannabis stocks
As a drug developer, Cara Therapeutics is both an enticing and risky investment.
The company is only loosely connected with the medical cannabis industry through the development of CR845, what is known as a “kappa opioid agonist,” in the treatment of pain and itching. Cara stocks received some heavy blows last year when the first two pre-clinical trials turned out statistically insignificant results in the treatment of osteoarthritis in hips and knees. However, a third trial with post-operative patients proved promising enough to continue forward in development, and trials to treat chronic kidney failure patients for itching also revealed the drug’s potential for further development.
Therefore, while the future of the drug may be insecure, and with it the company’s stocks, conversely the unknown potential of the drug’s significance on the medical market may be worthy of pursuit.