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Buy Marijuana Stocks 2017



Many marijuana stocks have languished in 2017 due to uncertainty about what actions the Trump administration plans to take to enforce federal laws against the sale and use of marijuana. Every comment made by the White House and every tweet from President Trump about marijuana holds the potential to cause shares to rise or fall. This could go on for another three and half years -- and potentially longer.




buy marijuana stocks 2017



However, this uncertainty doesn't affect developers of cannabinoid drugs like Insys and GW Pharmaceuticals (GWPH). Those companies are on the right side of federal laws and regulations. Their fates don't hinge on what happens with how the federal government might or might not enforce existing marijuana laws.


I have argued in the past that GW Pharmaceuticals was the best marijuana stock on the market -- and I still think it should do very well. However, there is a decent argument as to why Insys could be the better pick right now.


GW Pharmaceuticals has perhaps even better growth potential. Again, though, the biotech isn't as far along in the regulatory process as Insys is. Is Insys Therapeutics the best marijuana stock to buy right now? It could be. Even if not, I think it deserves a spot in the top tier of marijuana stocks with solid prospects.


Though most eyes were transfixed on the astronomical rise of cryptocurrencies this year, among traditional equities it was marijuana stocks that really impressed Wall Street. Of those pot stocks with a market cap of $200 million or higher, a majority have at least doubled in value this year.


You might be wondering what's behind the big rally in cannabis stocks? While a generally bullish market has certainly helped, there are five other considerably more prominent reasons behind the rally in marijuana stocks in 2017. In no particular order, here's what set pot stocks ablaze this year.


One of the clearer reasons why investors are flocking to marijuana stocks is the consistent shift in the way the public views cannabis. There can't be growth if the public doesn't support it -- and let's just say the support is very much there, at least in the U.S.


In October, Gallup released its latest marijuana survey and found that an all-time record 64% of respondents favored the idea of legalizing weed nationally. Comparatively, this was up from 60% in 2016, and a big march forward from the 25% support this idea had back in 1995, the year before California became the first state to green-light medical cannabis. An April 2017 survey from CBS News showed similarly strong support, with an all-time high of 61% of survey-takers supporting the idea of legalization.


Favorability toward legalizing medical cannabis is even stronger. An August poll from the independent Quinnipiac University found that 94% of respondents supported the idea of legalizing medical cannabis, compared to a minuscule 4% who opposed the idea. With favorability growing, it's seeming likelier that pressure will be placed on Congress to consider rescheduling marijuana at the federal level.


It was a pretty quiet year in the United States, with Nevada opening its doors to legal recreational marijuana sales at the beginning of July, and West Virginia becoming the 29th state to legalize medical cannabis in April. The upcoming year should allow the American public to have a bigger say on the topic in a handful of states.


Germany also put its medical cannabis law into effect this past March, following a favorable vote in January 2016. As more countries jump on board, the pathways to acceptance and profitability open up for marijuana stocks.


In April, Canadian Prime Minister Justin Trudeau stuck to a campaign promise and introduced legislation that would legalize recreational marijuana. Though estimates vary, giving the green light to adult-use pot could add $3.7 billion to $5 billion in annual sales to the Canadian pot industry.


Yet another reason there's been a lot of buzz surrounding marijuana stocks is the rapid sales growth and potential within the industry. Regardless of the source, pundits expect significant yearly growth from the legal weed industry.


By a similar token, Marijuana Business Daily's latest report, "Marijuana Business Factbook 2017," estimates that U.S. legal cannabis sales will grow by 30% in 2017, 45% in 2018, and an aggregate of 300% between 2016 and 2021 to about $17 billion.


Cowen & Co. has taken things one step further. By 2026, the investment firm believes U.S. marijuana sales could hit $50 billion. This type of growth is hard to overlook, which is why pot-stock investors have been diving in.


Last, but not least, we're beginning to see that some marijuana stocks can actually be profitable. The aforementioned Aphria and MedReleaf have been profitable in each of the past two years, albeit on a relatively marginal basis. Still, for an industry that's predominantly illegal, any sort of consistent profitability is nothing to ignore.


The reason for these profits is twofold. First, medical cannabis market growth has driven strong sales growth and modest/marginal profitability for Canadian marijuana stocks. According to Health Canada in May, eligible patient enrollment was growing at 10% a month, providing more than enough demand and revenue potential to push some growers into the black.


Marijuana stocks have given cannabis investors nothing but false starts over the past few years. Most recently, there were a plethora of issues facing the industry throughout 2022, including inflation, overproduction, lack of capital, job losses and cratering stock prices.


The Prime Alternative Harvest Index (opens in new tab), which tracks the performance of some of the cannabis industry's most prominent companies, delivered a fifth consecutive calendar year with double-digit negative returns. Perhaps worse: A $10,000 investment in the index at its inception on Dec. 18, 2017, would today be worth around $1,930.


The long-term prognosis for the cannabis industry is good. Ultimately, the following nine picks look like the best marijuana stocks (and funds) to benefit from this ongoing growth and maturation.


On the consumer side of cannabis, it has a $150 million six-year convertible note in RIV Capital (CNPOF (opens in new tab)), which represents a 42% stake. In March 2022, RIV Capital acquired Etain Health (opens in new tab), one of New York state's original medical marijuana producers, for $247 million. Etain has one of 10 vertically integrated licenses from the state.


Still, IIPR remains one the best REITs on Wall Street, as well as one of the best marijuana stocks, according to analysts. Piper Sandler analyst Alexander Goldfarb has an Overweight rating (the equivalent of Buy) on IIPR, with a $140 target price, some 55% higher than current levels.


The beer, wine and spirits purveyor invested in Canopy Growth (CGC (opens in new tab)) in 2017, buying a 9.9% stake for $191 million. In 2018, it upped that stake to 36.6% by plunking another $3.9 billion into the Canadian cannabis producer for 104.5 million shares plus warrants to acquire an additional 139.7 million shares in the future.


If you're looking for a pure-play cannabis company in the U.S., Massachusetts-based Curaleaf Holdings (CURLF (opens in new tab), $3.82) is one way to go. The firm got its start in New Jersey in 2010, developing one of the first vaporizers to administer a single measured medical marijuana dose.


A total of 39 states, as well as Washington, D.C., have legalized medical marijuana. Twenty-one states and D.C. have legalized adult-use cannabis. As more states legalize recreational weed, Curaleaf should be able to continue to grow its business organically and through acquisitions.


Cresco is one of Wall Street's favorite marijuana stocks. Of the 19 analysts following the stock, 13 give it a Strong Buy, three say it's a Buy, and three have it at Hold. Plus, the average target price of $6.88 implies the stock will more than triple over the next 12 months or so.


Not forgetting that this is an article about the best marijuana stocks, British American Tobacco invested an additional $5.1 million last March in Canadian cannabis producer OrganiGram Holdings (OGI (opens in new tab)), bringing its stake in the company to 19.5%. The two continue to collaborate on new cannabis-related products.


By comparison, the MJ ETF follows the performance of the Prime Alternative Harvest Index, which in addition to tracking cannabis stocks, also includes cigarette manufacturers such as Altria (MO (opens in new tab)) and a 20.1% weighting in the ETFMG U.S. Alternative Harvest ETF (MJUS (opens in new tab)). As a result of the ETF weighting, the Canadian content in MJ is slightly less than 42%.


Even though the cannabis industry is growing, there are only a few dozen publicly-traded players. And because Canada legalized recreational marijuana in 2017, many pot stocks are headquartered there. In general, cannabis companies are broken down into the following categories:


Growers: These are the companies that grow and sell the plant, and are most directly linked to products ultimately sold at dispensaries. Examples of such products include: medical marijuana, recreational marijuana, and items that include CBD (cannabidiol).


Because of the inherent risks related to investing in individual stocks, some investors may prefer to invest in exchange-traded funds (ETFs). There are nine ETFs that invest across those three aforementioned categories of companies and are traded on the U.S. stock market:


You may already be investing in marijuana stocks without realizing it, particularly if your portfolio includes any index funds that track small-cap stocks. For example, Scotts Miracle-Gro is included in more than 150 ETFs, while Tilray is a member of nearly 20, according to ETF.com.


Finally, the cannabis industry is evolving, so you must be comfortable with volatile price action in stocks and the possibility of companies going out of business. Some companies in this industry have drawn the interest of day traders on sites like Reddit, which has caused even more volatility. And the SEC warns investors about potential fraud related to microcap stocks more generally, and cannabis stocks specifically. 041b061a72


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