TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

Happy New Year. We are excited about the prospects for the marijuana and hemp industry in 2016 and we wanted to share our thoughts.

After the euphoria of investment excitement in March 2014, the stocks and company valuations in the marijuana sector have come down significantly to much more realistic valuations and not just high in the sky dreams. With a 50 to 80% drop in share price over the last 2 years, these cannabis related companies are now worth looking at again. Why? Because we think 2016 is going to be a rewarding year for cannabis related investments, especially the ones generating revenues and growing their business. 

If the Canadian Marijuana Index in the last six months is any indication of how Canadian marijuana stocks performed during the elections, then the US stocks for cannabis related companies should outperform the rest of the market. Here’s Why.

There has been a lot of excitement in the Canadian medical marijuana industry lately, many of the company share prices have risen as a result of the recent Liberal Party election win and Justin Trudeau's pro stance on marijuana legalization in Canada. We will be sharing out thoughts on this election outcome and what it means for the licensed producers in Canada in the coming weeks and year ahead.  

The chart to the right shows the Marijuana Index Canada and it's performance over the last six months, we can clearly see a rise going into the elections and the recent drop after the Liberal Party win.  Looking at the share price performance over the last month, the rise and fall of this index will give us clues and investment opportunities in the US market as we head into the United States election in 2016.

We expect a similar rise in cannabis related stock price (US and Canada) by the spring of this year, then a retreat into the summer followed by another rise by the end of 2016. We will explain our thoughts behind the stock price movements for next year in an upcoming special report.

As we start the new year, 2016 will be an exciting time for many of the US listed stocks. If marijuana legalization becomes a hot topic of debate, then we can expect a significant rise in many of the company’s share price. We at Invest In MJ, will be providing more coverage on the sector and the companies involved over the coming months. Here is a chart on how the MJ sector in the U.S. has performed over the last six months.

Source: MarijuanaIndex.com

While most of the investment attention in the last two years has been placed on in the medical marijuana sector, one of the sectors we do like for 2016 is the emerging hemp industry. Hemp is completely different than marijuana in that it contain very little THC, the psychoactive component that gets people high. While THC does have many health benefits, most hemp strains allowed for commercial agriculture contain very little THC. However some strains of hemp do contain Cannabidiol also known as CBD which also has great medicinal benefits without the effect of getting high. Hemp also has 100’s of uses as industrial products, it’s a renewable resource and is cost competitive to produced compared to tradition products using other base materials.

With a limited number of publicly traded companies focused on hemp based products, the pickings are slim but choosing the right company will be rewarding. We recently wrote a special report on HempLife Today and its parent company Ubiquitech Software Corp. (OTC:UBQU), the company is in a unique position of being a leader for hemp based CBD products.  

What makes the company unique is that produces and sells a product that is 100% legal in the United States and can be sold all throughout America in every state, unlike marijuana which can only be sold in states which have approved it for medical or recreational use. Having the ability to legally sell in all 50 states allows the company to build a national brand that is easily recognized around the country, versus some medical marijuana producers who can only sell locally in the state that has approved them. The company has had significant sales in 2015 and they expect a growth rate of several hundred percent in 2016. The stock price is currently trading less than 1x sales and the upside potential for investors can be rewarding in 2016, take a few minutes to ready why.

Over the course of the next year we will be evaluating companies that are already generating revenues, looking to expand and can increase shareholder value. These are the companies we feel will provide significant returns as the marijuana debate heats up during the United States election. Outside a complete market meltdown, which is possible for 2016 given how the stock markets have traded during the first week of the year, we do expect the marijuana and hemp sector and companies to outperform the general market.The Canadian experience of how cannabis related stocks traded leading up to and after an election is a good indication and point of reference. We should expect the US listed companies to trade in a similar manner over the course of this year.