Every month I slice and dice the performance of 6 categories within the overall cannabis market to unveil the strengths and weaknesses of its components and November saw a dramatic spread in the returns of those categories ranging from +9.1% to -23.5% versus -11.6% in the overall marijuana market. That's a dramatic spread and one worth understanding if you are considering positioning yourself in this burgeoning market sector.

The 6 baskets of marijuana stocks/ETFs consist of:

1. The Marijuana & Marijuana-related ETFs Category

This category consists of 15 ETFs of which 2 are US-centric (HMUS; USMJ), 2 are leveraged plays (HMJU; HMJI), 2 are marijuana/marijuana-related plays (ACT; MJ) and the remaining 9 are more broadly based and 6 of the 15 are passively managed and 9 are actively managed.

7 ETFs have been added over the course of 2019 making historical performance comparatives for all periods impossible but some interesting results are noted:

The total basket of ETFs, on average:

• declined 7.3% in November (excluding the leveraged ETFs) following on the heels of a
  • 8.4% decline in October,
  • a 13.3% decline in September and
  • an 11.9% decline in August.

For more insights into marijuana ETFs please read this recent article posted on TalkMarkets.

2. The CBD/THC Extraction Stocks Category

This category consists of 5 companies (LABS, VGWCF, RTI, NEPT and OILFF) that function as the middle-man of sorts in the cannabis supply chain purchasing dried cannabis, extracting the oil-like substance containing THC or CBD from the plant, and selling it back to the same producers, or to other producers that have requested cannabis extract. The category has received a lot of hype with the suggestion that its stocks are poised to capitalize on what could be the next big cannabis investing trend – extracted products - but it has been in decline since its peak back in March/April.

This basket of stocks, on average:

• declined 9.9% in November,
• increased 1.77% in October,
• declined 16.9% in September and 
• declined 17.3% in August

For more insights into vaping-related stocks please read this recent article posted on TalkMarkets.

3. The Marijuana-infused Beverage Category

Established beverage companies, as well as entrepreneurs, are developing formulas and methods for infusing CBD or THC, or both, into beverages in hopes of becoming the next "monster" of the rapidly emerging cannabis beverage market but no company stands out, as yet, as the company to invest in.

This basket of 8 stocks (WTER, NBEV, BEV, ZBISF, TNYBF, SPR, DIXI.U and HRVOF), on average:

• declined 16.8% in November,
• declined 16.7% in October,
• declined 17.4% in September and
• declined 8.9% in August

For more insights into marijuana-infused stocks please read this recent article posted on TalkMarkets.

4. Cannabis Companies Concentrating on Europe Category

The CBD industry will grow more than 400% through 2023 in Europe making it the largest legal cannabis market in the world and the following companies consider this to be a great opportunity to enter and/or expand through Europe.

The basket of 7 stocks (STIL, ALEAF, ELXR, WRLD.U, TGODF, AGFAF and RQB), on average:

• declined 23.5% in November,
• declined 32.2% in October, 
• declined 29.9% in September and
• declined 2.4% in August

5. The Marijuana-related Consumer Products/Pharmaceutical Stock Category

This category consists of 15 consumer products (tobacco, alcohol, food) and pharmaceutical companies that are directly involved in the cannabis sector. 5 (ABBV, MO, CODI, IMBBY, TAP) pay dividends ranging from 4.2% to 6.7%; 5 (BUD, IIPR, NVS, SMG, ASBFY) pay dividends ranging from 2.3% to 4.0%, 2 (STZ, HEINY) pays a dividends between 1% and 2% and 3 (PYX, ACNFF & ATD.A) don't pay any dividends.

This basket of 15 stocks, on average:

• increased 2.3% in November
• declined 5.2% in October,
• increased 0.9% in September and
• declined 7.2% in August

6. The Vaporizer Manufactures, Vape Extract Suppliers & Vape-related Stock Category 

There are 3 ways to play the cannabis vape market: choose to buy the vaporizer manufacturers and suppliers (KSHB; VPRB; GNLN; MCIG; OGI; WCIG), go after the recurring revenue provided by the extract suppliers (CRON; SPRWF; VEXTF) or invest in the less volatile vape-related big tobacco companies (MO; IMBBY; BTI; PYX; JAPAY; TPB; VGR).

The basket of 6 vaporizer manufacturers, on average:

• declined 6.4% in November,
• increased 11.76% in October,
• declined 41.3% in September and
• declined 25.9% in August

The basket of 3 extract suppliers, on average,

• increased 8.7% in November,
• declined 14.2% in October,
• declined 22.1% in September and 
• declined 16.8% in August

The basket of 7 vape-related tobacco companies, on average,

• increased 9.1% in November,
• declined 0.75% in October,
• declined 8.7% in September and
• declined 2.9% in August

Conclusion

Personally, I am inclined to invest in the most diversified, least volatile plays and that suggests serious consideration be given to:

• the Advisor Shares VICE ETF (ACT) which
  • increased by 6.1% in November following a decline of only 0.21% in October, a decline of only 1.5% in September and a decline of only 3.5% in August (and up 17% since the beginning of 2019) or
• perhaps one of the vape-related tobacco companies as mentioned in item 6 above.

Which approach you take to investing in the pot stock sector is up to you but I hope the above analyses help you decide which category is best for you. (Incidentally, you might want to forward this article to your portfolio manager/financial adviser as such insights into the fledgling market are not available elsewhere.)