CANNABIS IS A SUBSTANCE TREATED IN MANY WAYS: ILLEGAL, MEDICINAL, RECREATIONAL, CULTURE. IN THE WORLD OF INVESTMENTS, ANALYSTS CALL THIS MARKET "THE GREEN GOLD." THIS GUIDE EXPLAINS HOW TO INVEST IN CANNABIS.
Invest in Cannabis: Not Just for Recreation
Investing in financial assets related to Cannabis implies subscribing to one of the newer industries of the economy (in terms of a market that went from being 100% illegal to legal and fully extended in some countries). Many analysts agree that the Cannabis market has enormous potential as medical marijuana becomes more accepted among the population (and by the legal codes).
Through recent legalizations around the world, with Canada leading the pack, Cannabis has become one of the most talked-about investments in the world of finance since Cannabis stocks are among the fastest-growing in recent years. Almost 7% of Americans use Cannabis for medicinal or recreational use, based on different market consumer research. Projections indicate that by 2025, the cannabidiol market will reach USD 16,000 and USD 130,000 by 2030. In other words, exponential growth is expected. Most likely, several European countries will legalize recreational and medical marijuana in the upcoming years (if they have not already done so). In March 2021, actions related to Cannabis experienced robust growth since the State of New York passed a bill that legalizes the recreational use of marijuana. That is, not only the medicinal level of the plant but also its most popular use.
As mentioned previously, the demand for the production of Cannabis plants, their processes, and other derivatives will probably increase enormously in the upcoming years. This translates into potential profits for the companies that operate in this market, and therefore, for their shareholders.
How to Invest in Cannabis in 6 Steps [In Brief]
So, if the market will grow and generate profits for the shareholders, how do I jump in? Below we detail the simplified process.
Learn about the Cannabis Market and choose the Financial Instrument in which you will operate. If you are buying shares of a company, select the one you think has the most significant growth potential.
Choose the Online Broker with which you will buy the financial asset. The Broker will be the intermediary.
Open a Trading Account with the Online Broker. In general, the account opening process with a Trading platform is online, with the account opening completed in a few days. However, using a Demo account to test how to use it is recommended to test the platform for free. Try eToro's Demo for FREE.
Deposit Money. Many of the Brokers (most) do not have minimums; that is, you can start investing in Cannabis Assets with a few dollars or euros. In turn, many platforms allow deposits with credit cards.
Buy the Instrument with exposure to the Medicinal Cannabis market. Except for Trading platforms designed for professionals, most allow buying a financial asset straightforwardly and intuitively.
Review your investments. Periodically check your investments' status, review the investment strategy, and make the necessary adjustments when you see fit.
Financial Instruments to invest in the Cannabis Market
If we assume that the Cannabis market will experience exponential growth over the next few years, the profit potential with investments in this area will also do so. Hence, many analysts consider the medicinal Cannabis market as "Green Gold". Here are some options to gain exposure to the medical marijuana marketing market:
Buy Medicinal Cannabis Shares that are listed at the Stock Exchange: By way of introduction, and, without trying to give any investment recommendations, the most prominent companies related to Cannabis that operate on the stock market are: Canopy Growth, Aurora Cannabis, Cronos Group, Hexo and Canntrust Holdings. Financial analysts at Jefferies consider Canopy Growth and Aurora Cannabis the "best positioned to dominate globally" companies in the upcoming years.
Trade an Index that invests in Cannabis stocks: This is one of the simplest options to get a well-diversified exposure to this market.
Invest in an ETF focused on the Cannabis market: This option is a bit more complicated because not many ETFs invest exclusively in Cannabis stocks. However, the biggest ones (in terms of assets under management) are ETFMG Alternative Harvest ETF, AdvisorShares Pure Cannabis ETF, and The Cannabis ETF.
Where to buy Cannabis shares?
In line with the above, there are investment platforms, such as eToro, that offer the financial instruments detailed above.
A diversified asset with easy access is eToro's CannabisCare, which works as an Investment Fund (more precisely like an ETF). That is, the individual investor invests in this index and with only a purchase order, you are effectively investing in a complete portfolio of Cannabis Stocks. This option can be handy for those investors who prefer to diversify and do not intend to learn about each particular Cannabis company but rather invest in a good portion of all the companies that make up this market. eToro's portfolio uses Cannabis Shares listed on the US and Canadian Stock Exchanges and includes the following companies:
AbbVie (ABBV): This pharmaceutical company makes a Cannabis-based drug called Marinol, which treats appetite and weight loss associated with HIV and cancer.
Aphria Inc. (APHQF): Global leader in the cultivation and production of cannabis products for medicinal use, such as Cannabis oil, capsules, vaporizers, and more.
Aurora Cannabis Inc. (ACBFF): Canadian company that produces Cannabis flowers, oils, ground Cannabis, among other related products.
Cara Therapeutics (CARA): A biotechnology firm in a clinical phase produces several products for pain relief for chronic patients based on Cannabis.
Corbus Pharmaceuticals Holdings (CRBP): This company develops Lenabasum, a Cannabis-based drug for treating systemic sclerosis, cystic fibrosis, dermatomyositis and systemic lupus erythematosus.
Cronos Group Inc. (CRON): Canadian organization dedicated to promoting new companies that use Cannabis in various fields.
GW Pharmaceuticals Plc. (GWPH): British firm that received in 2010 the first market authorization for a drug to treat multiple sclerosis based on Cannabis, called Sativex.
Insys Therapeutics Inc. (INSY): Pharmaceutical company that has developed synthetic THC products and is in the process of obtaining different authorizations to produce other cannabis derivatives for medicinal use.
Scotts Miracle-Gro Company (SMG): New York-listed firm, a leader in the production and supply of seeds of many varieties for over 150 years. In recent years, the company has invested millions of dollars in acquiring companies for its Cannabis division.
Zynerba Pharmaceuticals Inc. (ZYNE): Develops cannabis-based drugs to treat rare diseases and syndromes such as Tourette and epilepsy.
Following, there's a visualization of the CannabisCare portfolio platform on the eToro trading platform.