After a difficult 2019 and first half of 2020, capital has remained a key consideration for companies and investors focused on the cannabis market.

At last week’s online Prohibition Partners LIVE event, a panel of business analysts dished about the ups and downs of the cannabis industry and examined why easy access to funds has died for cannabis firms.


The group of analysts included: Owen Bennett, equity analyst with Jefferies; Kaumil Gajrawala, analyst with Credit Suisse (NYSE:CS); and Paul Gurney, analyst with BMO Capital Markets.

 

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Where are the institutional investors?

For part of the talk, the panelists turned their attention to institutional investors’ lack of involvement in cannabis — despite constant whispers that they are interested in jumping in.

The Jefferies analyst explained that actual day-to-day institutional involvement at the moment is very small and is coming primarily from hedge funds. In his opinion, cannabis stocks won’t truly be tested until more established institutions pursuing long-term investments enter the space.

Bennett said there have been questions about the desired involvement of these larger groups due to the shaky nature of the industry. He explained that the sector has been ruled by easy money been doled out based on stock promotion, poorly designed projections from companies and lack of profits.

“Because money was easy there were a lot of companies in existence, and that still are, that shouldn’t even really be around,” Bennett told the web-based audience. “Those sorts of characteristics make it very difficult for a long-only institution to invest.”

And even as measurement metrics change and the sector becomes increasingly mature, one key factor remains: Cannabis is an illegal substance at the federal level in the US.

Gurney admitted to a fault in the system since, following the legalization of recreational cannabis in Canada, many expected a green rush and a legal US market 12 to 18 months after. “Here we are sitting 18 months later, and we’re no closer to a federally legal program in the US,” the BMO analyst said.

“Unless it’s federally legal, a lot of these institutions can’t invest,” Bennett added.

Growth-oriented investors versus value investors

Slower-than-expected growth and the stop-and-go in terms of legality in the US, the biggest market available, have also impacted other types of investors involved in the cannabis space.

Gajrawala said a large number of his clients felt like they were being left behind with the cannabis opportunity once the investment deal between Constellation Brands (NYSE:STZ) and Canopy Growth (NYSE:CGC,TSX:WEED) took place.

 

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In retrospect, Gajrawala said that the two part investment agreement between the alcohol maker and the Canadian cannabis name should have served as the first signal for his clients to start to take notice — not as a sign of a rush in the industry.

The Credit Suisse analyst explained that cannabis has had to deal with growth-oriented investors and value investors, two groups that have different goals.

As he put it, growth investors evaluate an opportunity and its ability to expand, whereas value investors examine an industry and say to themselves, “This business is of a certain size … it’s worth a certain price and I want to buy it at some discount to that price.”

Gajrawala said the growth investors have left the industry for now, but once the cannabis space picks back up he expects to see them return.

When it comes to deals affecting investors who are typically outside the cannabis arena, Gurney said when his firm served in the Tilray (NASDAQ:TLRY) initial public offering (IPO), he saw firsthand the increase in interest due to the returns offered by the cannabis company.

Tilray went public in July 2018, and within the next few months its share price was near US$300 — an unprecedented and shocking event for cannabis investors.

“When you see returns like that it attracts everybody, people find a reason to invest in it,” the BMO expert said. Gurney noted that the Tilray case led various cannabis IPOs to also go up, which “creates all sorts of issues … people think the money is easy, they misspend it, they misallocate it and all sorts of people who shouldn’t be invested in the sector come in and hand it out.”

Don’t forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

 

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US cannabis received a boost this week with a policy move that may hint at future changes.

Meanwhile, Amazon (NASDQ:AMZN) threw its full support behind cannabis reform in the US by way of a public post confirming the company’s acceptance of the drug.

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  • Research findings originated from cannabinoid-based collaboration with leading epilepsy researcher, Dr. Peter Carlen, at UHN that is also supported by a Mitacs Accelerate program grant.
  • Avicanna’s proprietary formulation showed promising pre-clinical results in reducing seizures and will be developed through the company’s pharmaceutical development pipeline as an epilepsy drug candidate.

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Avicanna Inc. (” Avicanna ” or the ” Company “) (TSX: AVCN) (OTCQX: AVCNF) (FSE: 0NN) a biopharmaceutical company focused on the development, manufacturing and commercialization of plant-derived cannabinoid-based pharmaceuticals is pleased to announce that it has filed a provisional patent application with the United States Patent and Trademark Office, entitled “Methods for Reducing or Eliminating Incidence of Seizures and Sudden Unexpected Death in Epilepsy”, on the use of a novel cannabinoid formulation (the “ Formulation Candidate ”).

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Cannabis legalization in Canada helped kickstart a financial revolution in the stock market with the launch of a diverse portfolio of marijuana firms.

With the boom of public cannabis businesses in full swing, are you thinking about investing in cannabis companies? If so, consider starting your journey here.

A wide spectrum of marijuana stocks have made their mark in the global industry thanks to the amount of money raised from investors and the attention the sector is getting from established industries.

 

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What’s to come is anyone’s guess, but it seems this new and burgeoning industry is still in its early days, with diverse nations beginning to move forward with plans for legalizing marijuana.

That means there’s likely still money to be made in cannabis stocks as the market builds and cannabis products expand in availability over the next few years.

There are many differing opinions about how much the global legal cannabis market will be worth in the years to come, with estimates including US$70.6 billion by 2028 and US$91.5 billion by that same year.

But one thing is almost certain: The market is set to grow as opinions surrounding the plant evolve over time and as platforms crop up to supply different consumption preferences. And all of that will mean more cannabis investment opportunities with both existing companies and future entries to the market.

For now, let’s take a look at where you can invest your money at this point in time.

How to invest in cannabis: Canadian cannabis stocks

First thing’s first: Canada. This is the obvious place to start as marijuana is legal at the federal level and Canadian cannabis stocks are less likely than their US counterparts to suffer from political volatility.

That said, due to the uncertainty of investing in the US marijuana space, where the drug is not legal at the federal level, Canadian firms have been forced to make choices about how they operate. For example, Canada’s senior exchanges do not allow companies with American cannabis assets to list.

While the Canadian cannabis space continues to face challenges, investors are eagerly watching as companies move into the edibles and beverages markets and develop new products.

For lists of Canadian marijuana stocks to consider, click here.

 

Cannabis Market Could Reach $5.5B By End Of Year

 
Experts Weigh In On Our Exclusive FREE Report. Can You Afford To Miss Out?
 

How to invest in cannabis: US cannabis stocks

Although some US states have legalized cannabis, American cannabis stocks may be riskier than those in Canada due to federal restrictions on the sale and cultivation of cannabis.

However, as the saying goes, the greater the risk, the greater the possible reward. The US market could grow up to US$43 billion by 2025, and that’s not even including the size of the market if nationwide legalization happens. It’s easy to see that US cannabis stocks could inherit a huge chunk of the pie if federal law finally legalizes the commodity.

All in all, picking the right US cannabis stocks could mean massive gains if the plant is ultimately legalized federally. It’s worthwhile for investors to do their research and to be aware of the risks and potential benefits involved in investing in the space.

For a list of US cannabis stocks to consider, click here.

How to invest in cannabis: A side note

Many companies in the cannabis space have begun to veer in one direction or another.

For example, some of the largest marijuana producers have moved towards deals with beverage or pharmaceutical companies for the production of novel new products. Others in the space continue to pursue innovation in the recreational market.

The beverage side in particular has seen interest from companies, with cannabis firms partnering with brew businesses. One example is Canopy Growth (NYSE:CGC,TSX:WEED), which has teamed up with Constellation Brands (NYSE:STZ), a leading producer in the alcoholic beverage industry.

It’s important to be aware that each niche has its own possibilities and challenges. For instance, while many market participants are convinced of the promise in beverages, these drinks have been hampered by strict marketing rules, among other factors.

Another aspect to consider is whether to pursue big caps or small caps. That has a lot to do with personal comfort. While big caps are often regarded as more stable than small caps, in the cannabis industry there’s been considerable volatility.

 

Cannabis Market Could Reach $5.5B By End Of Year

 
Experts Weigh In On Our Exclusive FREE Report. Can You Afford To Miss Out?
 

How to invest in cannabis: Cannabis ETFs

If you really know your cannabis companies, then you could enjoy larger gains by simply investing in those specific firms. However, if you aren’t overly familiar with the cannabis space or you are new to it, it could be a good idea to check out the cannabis exchange-traded funds (ETFs) available.

A cannabis ETF gives you exposure to several different cannabis stocks and takes the guesswork out of cherry picking which stock to bet on. One issue with ETFs is that like any other group dynamic, if one stock drops off it brings the whole fund down proportionally with it. Of course, the opposite is also true.

Recently investors have seen the addition of new ETFs offering exposure to the US market, including firms with entries into the hemp space, thanks to the sales of CBD products.

For a list of cannabis ETFs to consider, click here.

How to invest in cannabis: Final thoughts

No matter which way you slice it — or grind it, in this case — the cannabis market is an exciting business to invest in right now. Whether you invest in cannabis ETFs or Canadian or US marijuana stocks, or if you’re still waiting on the sidelines for more maturity from the types of cannabis companies trading, this industry is one to watch, and one that looks like it’ll keep climbing in the future.

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TransCanna (CSE: TCAN) (FSE: TH8) (“the Company”) is pleased to announce that plants are going into its first crop management site today – a greenhouse in Wesley, California.

The Company partnered with the 3rd generation cannabis farmers at 365 CannaFarms to consult on the construction of the state-of-the-art, computer-controlled greenhouse and to help manage the crop for the client, Central Valley Growers. The entire crop is comprised of premium genetic strains from Lyfted Farms, TransCanna‘s wholly-owned subsidiary.

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Numinus Wellness Inc. (“Numinus” or the “Company”) (TSXV: NUMI), a mental health care company advancing innovative treatments and safe, evidence-based psychedelic-assisted therapies, today announced it has closed its acquisition of the Neurology Centre of Toronto (NCT), a leading Canadian provider of clinical neurologic care. The purchase agreement was previously announced on July 6, 2021 .

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