Should Marijuana Stocks Be On Your Radar Right Now?

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


Back in 2013 and 2014, the "new idea" on Wall Street was investing in marijuana stocks. Since then, a handful of companies has now blossomed into an industry that encompasses hundreds of new names. These companies are host to business models ranging from growing cannabis to selling things like CBD and other derivatives. Say what you will but this industry is captivating a loyal following of traders and investors who see this as still a young industry.

While it may be hard to fathom based on the industry growth, the fact that cannabis is still illegal on a federal level in the U.S. means that there's plenty of runway left. According to recent data from Grand View Research, the global legal marijuana market size was valued at $9.1 billion last year. This is expected to grow at a compound annual growth rate (CAGR) of 26.7% from this year through 2028. Grand View said that one of the "major factors" driving this growth is the increasing demand for legal marijuana. Furthermore, the firm explained that demand for cannabis oil is increasing rapidly as well.

Despite being a business that was allowed to stay open during the pandemic, COVID-19 impacted the industry all the same. Data shows that the legal market declined by over 30% from 2019 to 2020. However, the market is expected to recover 25% to 28% within the next 5 years. Ultimately, the cannabis industry right now is much different than that of the early days in 2013 and 2014. It's not so much akin to the "dot com" bubble where all you needed to do was mention the keyword in a news headline. Now, fundamentals are beginning to take precedence. So why are stocks down right now?

Marijuana Stocks: To Buy Or Avoid?

If you look at some of the major cannabis ETFs, the trend (for now) hasn't matched stock market performance. The ETFMG Alternative Harvest ETF (MJ) started the year strong coming off of a big end to 2020. But since topping out at $34.58 in February, the ETF has dropped 42% (so far). Similarly, the AdvisorShares Pure US Cannabis ETF (MSOS), which is focused on the US marijuana industry also pulled back significantly since its early 2021 highs. In this case, MSOS dipped back to levels around where it started the year at. The AdvisorShares Pure Cannabis ETF (YOLO) and the Amplify Seymour Cannabis ETF (CNBS) have each mirrored this trend.

Since Canada is already fully legal, the focus right now is on the U.S., which has a far greater addressable market. Late last year, BofA analysts said, "The United States is classified as being the market leader with 34% of the total market, or $62.568 billion." Right now 2021 and possibly 2022 are being seen as the year(s) of the MSOs or "multi-state operators" and for good reason. While Canadian companies have waffled from a revenue perspective, US firms have shined. For example, HEXO (HEXO) published its third-quarter results this month. It booked C$22.7 million in total revenue. This was only 2% higher on a year-over-year basis and it was 31% lower quarter over quarter.

On the other hand, results from US companies like Curaleaf (CURLF) and Trulieve (TCNNF) show much stronger and larger growth. Trulieve posted revenue of $193.8M USD in Q1 and EBITDA came in at $90M US. Meanwhile, Curaleaf reported over $260 million USD in Q1 revenue with an adjusted EBITDA of $62.625 million USD. The interesting part of all of this is that these companies were trading as penny stocks not that long ago. And yes, by definition, I'm talking about stocks trading below $5 a share. Looking at where all of these marijuana stocks are right now shows the overall sentiment in the market from a bigger picture standpoint.

Now, I understand that if you're trading penny stocks on Robinhood or simply trading any stocks on Robinhood, many of the U.S. cannabis companies are inaccessible. That's because apps like that and Webull don't allow access to OTC stocks. Needless to say, that doesn't mean the ETFs are the only way to gain exposure to marijuana stocks right now. So I've put together a list of pot stocks listed on the NASDAQ and NYSE right now. There are a few new IPOs to keep track of but for now, here's the list:

List Of Marijuana Stocks On Robinhood/Webull

Company Name Stock Symbol
Abbvie ABBV
Aurora Cannabis Inc. ACB
AFC Gamma Inc. AFCG
Amyris Inc. AMRS
Applied DNA Sciences Inc. APDN
Arena Pharmaceuticals ARNA
Cara Therapeutics Inc. CARA
Canopy Growth Corporation CGC
Compass Diversified Holdings CODI
Corbus Pharmaceuticals Holdings Inc. CRBP
Cronos Group Inc. CRON
Eastside Distilling, Inc. EAST
Evogene EVGN
Greenlane Holdings Inc. GNLN
GrowGeneration Corp. GRWG
HEXO Corp. HEXO
India Globalization Capital IGC
Innovative Industrial Properties Inc. IIPR
Akerna Corp. KERN
Marrone Bio Innovations MBII
Altria Group MO
NewAge Inc. NBEV
Neptune Wellness Solutions Inc. NEPT
Intec Pharma Ltd. NTEC
Organigram Holdings Inc. OGI
Power REIT (MD) PW
Gibraltar Industries Inc. ROCK
Schultze Special Purpose Acquisition Corp. SAMA
Scotts Miracle-Gro Company (The) SMG
Sundial Growers Inc. SNDL
Tilray Inc. TLRY
Therapix Biosciences Ltd. TRPX
Urban-gro, Inc. UGRO
Village Farms International Inc. VFF
22nd Century Group Inc. XXII
cbdMD Inc. YCBD
Zynerba Pharmaceuticals Inc. ZYNE

 

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