American pot companies to invest in

In June , the U. Other changes, however, could be bad news, such as the possibility that European medical cannabis markets don’t grow as quickly as expected. It’s also one of the best-positioned marijuana growers in international markets. Image source: Getty Images. The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution, and sale of medical and recreational marijuana. Follow keithspeights. These include white papers, government data, original reporting, and interviews with industry experts.

Unknowns abound in the new industry, but these six things are important to know about every cannabis company. The following article is part of a package of stories that MarketWatch is publishing to mark the start of full legalization of cannabis for adult use in Canada on Wednesday. Like any hot and relatively new sector, the cannabis industry can be confusing, with high potential for scams, as the Securities and Exchange Commission has warnedso investors need to know the basics. To start with, there are a handful of large companies that actually touch the marijuana plant — an important distinction — and there are metrics that are unique to the industry that can help investors understand the underlying business. There are six large public cannabis companies that demand attention: Aphria Inc. CGC,

1. Understand the types of marijuana products

Over the past few years it has been very difficult to try an invest in the legal marijuana movement. Almost all of the companies available are penny stocks with cringe worthy financial statements. Ten of the 14 stocks currently held in the fund are Canadian-based companies, most of which are licensed producers of legal medical marijuana. Three are pharmaceutical companies based outside of Canada. An article on cnbc goes into further detail:. Canadians are bringing a new meaning to the term «investor high,» with the world’s first marijuana-focused exchange-traded fund opening on the Toronto Stock Exchange.

VFF, VGW.V, and VFF were top for value, growth, and momentum, respectively

Unknowns abound in the new industry, but these six things are important to know about every cannabis company. The following article is part of a package of stories that MarketWatch is publishing to mark the start of full legalization of cannabis for adult use in Canada on Wednesday. Like any hot and relatively new sector, the cannabis industry can be confusing, with high potential for scams, as the Securities and Exchange Commission has warnedso investors need to know the basics.

To start with, there are a handful of large companies that actually touch the marijuana plant — an important distinction — and there are metrics that are unique to the industry that can help investors understand the underlying business. There are six large public cannabis companies that demand attention: Aphria Inc. CGC, TLRY, All produce thousands of kilograms of weed each quarter, which is critical, as there are dozens of smaller businesses both public and private that have yet to bring products to market.

Some of those are expected to die, and some are expected to thrive. As Canadian legalization approaches, MarketWatch american pot companies to invest in profiling each of these six companies, touching on the metrics discussed below, to give investors a clearer picture of their businesses:. Aphria profile: Aphria is positioning itself as a low-cost pot producer.

Aurora profile: Aurora Cannabis investments may be more valuable than its pot. Cronos profile: Meet Cronos, the Heinz Ketchup of weed. GW profile: GW Pharma is a drugmaker that grows its own cannabis plants. Tilray profile: Vancouver Island—based Tilray has global ambitions. As with any business, the top and bottom lines are critical measures of success for cannabis companies.

Of the largest five producers in Canada by market capitalization GW Pharmaceuticals is based in the U. Beyond profit and sales, there are five other criteria that investors should watch closely when evaluating companies in the industry. Eventually, some cannabis companies will probably specialize in either medical or recreational marijuana. At the moment, for pot producers large and small in Canada, they are all medical-cannabis businesses — or not making sales at all.

There is a sophisticated, existing system to produce and distribute medical pot throughout the country and for export. What remains to be seen after Oct. There is no guarantee that any will become the Coca-Cola of pot, and some may remain more successful at selling medical cannabis. Every major Canadian producer breaks down in its quarterly financial statements how much pot it has actually grown and how much pot it has sold.

These are critical numbers because they demonstrate that the company can grow and sell the once-illegal product. There is no standard way to do so.

Canadian regulators are not happy with the current level of disclosure related to per-gram costs, among other reporting issues. In a notice sent Oct. For all cannabis companies, one of the most significant inputs is energy, since cannabis is an energy-intensive product that requires as much sunlight as a vineyard. Low growing costs also correlate closely with the bottom line. While some major cannabis producers are already profitable businesses, the introduction of recreational cannabis is expected to shift demand from the black market into the hands of legal businesses.

Most large producers disclose their square footage under cultivation, as well as how much they are licensed by the Canadian government to produce. Investors should look at how much new capacity they are building, so they can figure out at what point the company will have to use capital to expand. This is where the money is, at least for. Cannabis companies have been signing agreements to supply marijuana, both in Canada and.

Licensed weed producers are regulated by Health Canada, the federal ministry that grants the certification to grow cannabis. Canadian legislation has left the provinces to determine how pot will be distributed, however, similar to how the country handles alcohol sales. While each province has set up the rules for cannabis sales slightly differently, the agreements the various provincial entities have struck with weed producers are critical. The information provinces offer is helpful but incomplete.

They have announced supply agreements but few details about actual purchases. Some provinces and companies have released the maximum amount of cannabis under the agreement the province will buy, but there is no guarantee that number will be reached. What neither companies nor the government know at the moment is what people around Canada will actually buy, which products will be successful, or which brands will attract consumers.

While every producer will make money from the first round of sales to various provincial authorities, in the long run nobody knows who will succeed. Beyond domestic sales in American pot companies to invest in, there are an increasing number of opportunities to export cannabis or set up shop inside countries that have legalized medical marijuana.

Deals with international pharmaceutical companies for distribution are also worth noting. The key, as in other sectors, is that investors should look for companies that develop a technology that is best-in-class or fundamental to the future of the cannabis sector, one that competitors will have to pay to use. Max A. Cherney is a MarketWatch reporter based in San Francisco.

Follow him on Twitter chernandburn. Economic Calendar Tax Withholding Calculator. Retirement Planner. Sign Up Log In. A guide to pot stocks: What you need to know to invest in cannabis companies. By Max A. Comment icon. Text Resize Print icon. Cherney Reporter. What business are they in? How much cannabis are they growing and at what cost? How much cannabis can companies grow? What supply agreements do they have? What intellectual property do they own?

MarketWatch Partner Center. Most Popular. Advanced Search Submit entry for keyword results. Aurora Cannabis Inc. Canada: Toronto: ACB. Volume 8. Cronos Group Inc. Volume 4. Volume Canopy Growth Corp. Volume 5. Volume 1. Tilray Inc.

OTC stocks don’t have to meet these requirements. I’ll highlight one stock or ETF from each category that I think warrants special consideration. Stock Advisor launched in February of Your Money. Related Articles. Marijuana Investing. Tilray Inc. Partner Links. Canopy Growth isn’t profitable yet because it’s investing heavily in expansion efforts. Article Sources. Marijuana Investing The Amazon of Cannabis. Disruptive technology significantly alters the way businesses or entire industries operate. MJ posted a month trailing total return of The company’s business operations support drug testing invet hair samples. Part Of. Psychemedics Corporation operates in the enforcement sector. If the growth you were counting on doesn’t materialize, you should reevaluate your assumptions.