Investing in Green Rush
The legal marijuana market is one of the fastest growing industries in the world. The U.S. cannabis industry is about to become a massive economic force, as legislators allow more legal uses of marijuana and marijuana-related products, particularly medical marijuana usage. After the November elections, the financial impact of cannabis products on the U.S. economy became a subject for researchers, economists and stock watchers across the land. With 28 states legalizing medical marijuana and eight going one step further with legal recreational use, and pharmaceutical companies working hard to get THC-based medicines approved, investors are looking for new ways to make money investing in green rush. According to the report by Bank of America, the U.S. marijuana market could reach a net worth of $30 billion annually by 2020, almost three times the yearly revenue of the National Football League.
As of November 9, 2016, the use of both recreational and medicinal marijuana has been legalized in the states of Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington. 28 states and the District of Columbia allow their citizens to use medical cannabis, with an estimated combined population of 203.3 million. A 2015 poll by Harris found that 81% of Americans support legalization of cannabis for medical use.
Legal marijuana sales are projected to reach $20.6 billion by 2020 from $7.4 billion now, with a compound annual growth rate of 29 percent, according to Arcview Market Research, a San Francisco-based cannabis research firm. Medical marijuana sales in California hit $2.7 billion last year. According to the Marijuana Policy Group, legal weed created 18,005 full-time jobs and adding about $2.4 billion to the Colorado’s economy in 2015. Excise and sales taxes alone brought in $121.5 million; much of the remaining increase in revenue was driven, essentially, by weed tourism.
North America is not the only country where the perception towards cannabis products is becoming more acceptable. The global medical marijuana market is expected to reach a value of $55.8 billion by 2025, according to a new report by Grand View Research. Increasing investment in R&D & demand for cannabis in chemotherapy is expected to drive the growth in the Asia Pacific market.
The increasing interest amongst the academic researchers and healthcare providers regarding the therapeutic uses of marijuana is among the significant factors, which is driving the market over the coming years.
Some of the key players are;
GW Pharmaceuticals – (NASDAQ:GWPH)
Canopy Growth Corporation – (WEED:CA)
Aurora Cannabis Inc. – (ACB:CA)
Axim Biotechnologies – (OTCQB: AXIM)
Aphria Inc – (APH:CA)
Cannabics Pharmaceuticals – (OTCQB:CNBX)
Cannabis Sativa – (OTCQB:CBDS)
United Cannabis Corporation – (OTCQB:CNAB)
Many investors are betting these cannabis companies will benefit. The rapid growth of the medical marijuana industry, which includes the growth in the size of companies and the number of companies that are publicly listed on North American stock exchanges, has created enough market depth and liquidity. The North American Marijuana Index has more than doubled in the last month and half and that was largely driven by volume.
The global cannabis industry is the fastest growing industry in the world and Canada has been the country leading this charge. Canada’s Horizons ETFs Management plan to launch the Horizons Medical Marijuana Life Sciences ETF (“HMMJ”) in April. It will include 11 Canadian-listed stocks and four listed in the United States. The largest stock in the fund is Ohio-based, New York Stock Exchange-listed lawn care provider Scotts Miracle-Gro, which invests in hydroponics, soil, growing systems and lights for the marijuana sector. British pharmaceutical giant, GW Pharmaceuticals (NASDAQ:GWPH), which is NASDAQ-listed, is also included due to its focus on developing cannabinoid-based medicine, and International Cannabis Corp, a marijuana producer in Uruguay, the only country where marijuana is currently legal at the federal level.
The cannabis industry is growing at a compounded annual rate of 30%, making it one of the fastest growing sectors in the economy. It is an industry with incredible opportunities, and significant risks. As the market stabilizes, banking services become available, and more liquidity is injected into the market, there will be new opportunities to build sophisticated financial instruments that allow for price hedging and risk management.