Marijuana Stocks Down Under

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The marijuana stocks boom could be getting a boost from the Aussie market.

As the cannabis industry eagerly awaits Canada’s impending legalization of recreational marijuana, smaller cannabis companies are finding themselves the focus of a new frenzy of investors looking for marijuana stocks to invest in.

On the Australian market, bigger cannabis players like AuscannGroup Holdings Ltd (ASX: AC8) and Cann Group Ltd (ASX: CAN) are positioning themselves globally to become Australia’s key exporters of nationally-grown cannabis. Each company has experienced market cap swells of $400 million or more.

But it’s the companies with smaller caps trading on the ASX, risky as they may be, that may be of interest to investors looking for an entry point in marijuana stocks in Australia.

 

Hydroponics Company Ltd (ASX: THC)

As is the trend for most medical marijuana companies trading on ASX, Hydroponics straddles the Australian and Canadian markets for marijuana stocks.

Here is what distinguishes it from other small cap Australian MMJ companies: it’s seeking vertical integration along the supply chain in the cannabis industry.

In other words, the company aims not only to supply hydroponic equipment and construct large-scale greenhouses, but also to make a name for itself as high quality cannabis growers and cultivators and distributors of Australian product manufactured by leading MMJ companies overseas.

Back in November, Hydroponics surprised the cannabis market as its weed stocks price quadrupled in value over the course of a few days.

A series of positive company announcements preceded these sharp increases.

  • First, Canndeo Ltd, Hydroponics’ wholly-owned subidiary, received its second license from the Australian Office of Drug Control for MMJ cultivation.
  • Shortly after, Canndeo secured deals as the Australian distributor for CBD products imported from reputable MMJ producers in Israel and Europe.

Hydroponics also struck a partnership with National Access Cannabis, a Canadian healthcare service provider that helps patients access high quality cannabis for medicinal purposes. This deal will enable them, through a transfer of IP, to eventually launch clinics in Australia under a similar clinical model.

In last week’s news, Hydroponics announced its completion of a cultivation, research and development facility in Queensland. The first pilot crop will commence pending government approval.

Creso Pharma Ltd (ASX: CPH)

Creso Pharma, specializing in medical cannabis development and production, is structured with pharmaceutical precision and expertise in mind. Subsidiaries in Europe, Canada and Australia lend it diversity and enable it to capture a wider portion of the marijuana market.

Their offering of adult-use weed in Canada, hemp-based products in European markets and CBD products in both human and veterinary pharmaceutical markets makes their marijuana stocks global, in more ways than one. 

An announcement last week revealed Creso’s MMJ production facility in Nova Scotia is slated for completion by early summer, hopefully in sync with Canada’s legalization of recreational use marijuana. After the announcement, the company’s marijuana stocks price rose 15% the same day, reflecting a positive market reception.

What conscientious investors want to keep in mind with these and all marijuana stocks listed on the ASX is that they haven’t yet generated notable revenues. Stocks whose market valuations are based on potential tend to display high volatility in price, due to their being subject to numerous variables that can affect projected earnings, including:

  • increasing competition in the industry
  • stricter regulators
  • governmental changes
  • unsuccessful results from clinical trials not withstanding

Marijuana stocks investors are encouraged, as always, to exercise well-informed caution.

For more news on the Australian cannabis market, read More Positives for Pot Stocks: Two Big Marijuana Mergers This Week.  

 

 

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