Looking To Score? Join the “Green Rush” in Pot Stocks
Nobel Laureate Bob Dylan, the man credited with first giving marijuana to The Beatles, sang back in the 1960s: “The times they are a-changin’.” That’s sure true when it comes to pot.
During my rebellious teenage years in the Nixon Era, if you had told me that marijuana would become legal in several states and a booming, multi-billion dollar mainstream industry, I would have asked you: What the heck are you smoking?
But today, pot has transitioned from a symbol of counter-culture defiance to a full-fledged “canna-business.” Investors can make a lot of money by jumping aboard the green rush.
ArcView Market Research predicts marijuana for medicinal and recreational use will burgeon into a $22 billion-a-year industry by 2020. That spells investment opportunities for you.
First, let’s look at the political revolution that has fueled the rise of canna-business.
States can adopt their own legal standards for marijuana thanks to Congress, which prohibits drug enforcement agents from pursuing marijuana growers and users in states where pot is legal.
On November 8, Hillary Clinton and the Democrats lost the presidency but marijuana won the day. Voters in Massachusetts, California, Maine, and Nevada approved ballot initiatives on Election Day to legalize marijuana for adult recreational use. Recreational pot has now been legalized in eight states, while 28 states have approved medical marijuana. Those states account for more than half the nation’s population. In addition, several more states voted for looser restrictions.
That said, marijuana remains banned at the federal level and proponents of marijuana normalization face a major roadblock in President-elect Donald Trump’s choice for U.S. attorney general, U.S. Senator Jeff Sessions (R-AL), who is a vocal opponent of marijuana legalization.
During his Senate confirmation hearings this week, the likely next attorney general was vague when pressed about how he might approach the drug. But Sessions is expected to be fiercely anti-weed.
“I won’t commit to never enforcing federal law,” Sessions told Congress on Tuesday, responding to a question about whether he’d use federal resources to prosecute people using marijuana in accordance with their state laws.
Nonetheless, canna-business enjoys several tailwinds and the time is ripe to invest in marijuana stocks, before the pot industry matures and the stocks of its major players get too expensive.
A wide range of companies are exploiting the trend toward marijuana legalization, not only by growing and selling pot but by creating branded edibles, tourist junkets, vaping parlors, paraphernalia, shops, seeds, fertilizers, and trade shows.
One marijuana stock stands out from the pack: G.W. Pharmaceuticals (NSDQ: GWPH). London-based GWPH discovers, develops, and markets cannabinoid prescription medicines. The company’s primary product is Sativex, an oromucosal spray for the treatment of multiple sclerosis, cancer pain, and neuropathic pain.
With a market cap of $3 billion, G.W. Pharmaceuticals is one of the few marijuana companies that’s not a micro-cap, penny stock. Over the past 12 months, GWPH shares have soared 43%, with room for further capital appreciation. The average analyst estimate for the company’s earnings growth next year is 44.7%, on a year-over-year basis.
G.W. Pharmaceuticals has successfully launched several stock offerings to strengthen its balance sheet and finance its broadening portfolio of marijuana-based medicines. The company also is partnering with Novartis (NYSE: NVS) and Bayer (OTC: BAYRY) to market its drugs.
Meanwhile, smaller companies are coming to the fore that will probably be gobbled up by their bigger peers.
InMed Pharmaceuticals (OTC: IMLFF) is a penny stock with the technology to do what GWPH does, but cheaper and faster.
InMed has created its own proprietary biosynthesis drug development platform that derives cannabinoids from plants in a cost-effective and efficient manner. This process can help the company develop treatments at a more accelerated pace than any other medical marijuana treatment-maker.
Another small fry is Kalytera Therapeutics (TSXV: KALY), which is developing a new class of proprietary cannabidiol (CBD) therapeutics. CBD is a pot-based compound that has shown promise treating diseases but there are limitations associated with natural CBD, including its short half-life and poor efficacy when administered orally.
Low “oral bioavailability” in clinical trials is a major reason for drug candidates failing to reach the market. Kalytera is testing new CBD formulations to overcome these limitations.
Insys Therapeutics (NSDQ: INSY) makes Subsys, used for the management of pain in cancer patients who are tolerant to opioid therapy for their persistent cancer pain. Insys Therapeutics (market cap: $712.68 million) is addressing the nation’s urgent need to find non-addictive painkiller substitutes, as opioid abuse becomes an epidemic.
If you’re looking for a pot stock, GW Pharmaceuticals is your best and safest bet, whereas these smaller and riskier marijuana companies could become attractive takeover targets. In coming months, many small marijuana stocks are likely to either get bought out or go belly-up, so buyer beware.
Silicon Valley is taking notice…
Established technology companies are joining the green rush, as states require tracking systems to monitor their changing laws and regulations regarding marijuana.
To profit from the marijuana boom, the investment strategists at our flagship publication Personal Finance advise you to stick to the larger-cap companies, for now, until the legal picture for pot is clearer at the federal level.
PF Growth Portfolio denizen Microsoft (NYSE: MSFT) recently entered into a joint venture with California startup Kind to create software that facilitates state rules on both medicinal and recreational levels. This tech giant should get a boost from growing marijuana demand, but it’s large and diversified enough to withstand any temporary setbacks in canna-business.
Got any questions about pot stocks in particular, or growth opportunities in general? Drop me a line: email@example.com — John Persinos
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