Are Marijuana Stocks Set to Outpace the Market?

Amid the market stumble earlier this month, there are still some interesting options for long term marijuana stocks to invest in.

Even with what appears to be a delay in Canada’s legalization of marijuana for recreational use, this year will see no shortage of industry catalysts that will no doubt have some effect on the marijuana stocks market.

Once Canada’s legal market opens for adult-use marijuana, it will fall second in line behind Uruguay among countries with nationwide legalization. With all the new offerings, Canada’s market is drawing U.S. companies into foreign exchanges, rather than sticking with a traditional IPO.

Some analysts, looking at the cannabis industry’s overall potential to grow steps ahead of the market, wonder if this sector is still in its stages of infancy. In the last 12 months, for example, the North American Marijuana Index reflects a general increase among pot stocks which is greater than 125%. Compare this with a 22% increase for the S&P 500 over the same period of time, and it becomes a compelling question.

This potential for marijuana stock expansion is cropping up in several places.

First of all, pot stocks are garnering the attention of serious retail players.

(For more information on retail expansions, read Buying into Booze Top Cannabis Stock Aurora Closes Deal with Big Liquor.) 

Secondly, funds from private and public entities alike are presently investing by the millions in the cannabis sector, offering a significant boost in growth potential. As more of these high profile public offerings launch, the industry is progressing toward a mainstream spotlight.

(For more recent news on cannabis stock indices and trading opportunities, read MPX to be Included on New Index for Marijuana Stocks). 

And thirdly, as the rest of this article will explain in further detail, new investments in IPOs seem to indicate a shift in the industry and unique opportunities for marijuana stocks investor growth.

Let’s take a look at two cannabis stock IPOs for investors to keep an eye on.

The Green Organic Dutchman

This Canadian cannabis producer, still pre-IPO, is anticipated to IPO in March. To date, the company has raised $160 million, helped along by Aurora Cannabis’ recent investment of $55 million, which bought them a 17.6% stake in The Green Dutchman and an option to increase to 51%. With all of The Green Dutchman’s expansion plans underway, it holds some of the industry’s highest expectations among cannabis stock IPOs.

Some of the assets that set The Green Dutchman apart are technology and access to power, which has come by way of partnerships with Eaton and Hamilton Utilities Corp. Through these partnerships, The Green Dutchman can outsource heating, cooling, power and C02 production, enabling them to lower production costs per kWh and positioning them among the lowest-cost producers in the industry.

MedMen (OTC: MDCL)

The event of MedMen “going public” is another highly anticipated day in the marijuana market. This U.S. based IPO is unique in that, rather than keeping an IPO in the states, it is optioning for a reverse merger in Canada.

The company looked at its options – Canadian Stock Exchange versus an OTC marketplace – and decided on the Canadian market because of the success marijuana stocks like Canopy Growth Corp and MedReleaf have had in raising significant funds.

MedMen operates growing facilities, retail stores and 18 facilities in three different states. It was recently valued at $1 billion with $150 million in total equity investment, thanks in part to fundraising agreements secured with companies like Captor Capital (OTCPK:NWURF). Captor Capital created an advisory board for the cannabis industry toward the end of 2017 and recruited three executives from MedMen to oversee it. This has helped set the stage for other large companies to take “investment-style” approaches in cannabis industry partnerships.

In short, there are several highly anticipated events happening across the industry and ample opportunities for new and seasoned weed stocks investors to tune into.

(For more information on related growth opportunities in the MMJ stock industry, read More Options for Canadian Marijuana Stocks as another ETF Opens).