Despite still being technically illegal, the cannabis industry has continued to grow rapidly in North America, with more and more companies going public. In fact, the number of publicly traded cannabis stocks has grown from around 75 in 2014 to over 350 in 2015.
However, while the sector experienced double-digit gains last year, many cannabis stocks have seen share price drops in 2015. As a result, it’s become difficult for investors to decipher which of the many legal cannabis stocks out there are legitimate and which are penny stock scams.
To help cannabis investors better understand what to look for, the Investing News Network spoke with an expert in the space and put together a brief guide on today’s legal cannabis stocks.

What to look for when investing in legal cannabis stocks

As mentioned, the volume of public cannabis stocks in the market has made it difficult to decide which are worth investing in. That’s partially why many stocks are experiencing share price declines despite having great products, teams and assets.
“The main reason cannabis stocks are down is there are no institutional investors,” Derwin Wallace of Cannabis Investor Webcast explained. “There is really no Wall Street involvement, no banks buying the stocks because of federal regulations.”
In other words, looking for cannabis stocks that have cash on hand is a good start. “Cash is my number one metric. If they don’t have any cash, they can’t grow the business,” said Wallace.
Seems simple, doesn’t it? Unfortunately, it’s not always easy to find even basic company information. Wallace explained that because many cannabis stocks are listed on the OTC, they aren’t required to file with the SEC.
“There is a reason they aren’t filing — it could be that they are hiding something, they don’t want you to see something or that they don’t have the money to pay accountants and whatnot. It is a huge red flag,” he noted.
Another metric Wallace said to look at is the number of outstanding shares a company has. If a cannabis stock has a lot of outstanding shares and no revenue, it means that shareholders have little chance of making any money — even if the company eventually does start turning a profit. Other things to look at when choosing a cannabis stock to invest in are liquidity, how many shares are traded per day and outstanding debt.

 

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Management is also important. “You have to look at who is running the company and if they are credible. If you have a pharmaceutical company with a management team with no members with PhDs or doctorates, it doesn’t make much sense, does it?” he quipped.
Furthemore, it’s key to understand that there is an eclectic mix of companies that fit under the “cannabis stocks” banner, from pharmaceutical companies that conduct research, to producers and dispensaries that sell the product to ancillary businesses, including consulting, biotech, real estate, software and security.
“A lot of people think that when we refer to the cannabis space, we are talking about companies that actually touch the plants, either a grower or a dispensary, but it covers a lot more than that,” Wallace said.
Naturally, it’s safer to look at businesses that don’t actually deal with the plants themselves — everything from growing and harvesting equipment, such as lights and fertilizers, to medical containers. Investing in such quasi-cannabis stocks removes the issue of legality completely.
Here is a list of the cannabis stocks and ancillary stocks that Wallace and Technical420 founder Michael Berger believe are worth looking at.

Legal cannabis stock picks

  • Nemus Biosciences (OTCMKTS:NMUS) — A biopharmaceutical company focused on developing and commercializing new chemical entities from cannabinoids.
  • Med-Cannabis Pharma (OTCBB:MCPI) — A company focused on acquiring medical marijuana dispensaries in the US. Currently has three locations in Oregon, where cannabis is legal.
  • Tweed (TSXV:TWD) — A legal medical marijuana company based in Ontario. Tweed is one of the authorized licensed producers under Health Canada’s Marihuana for Medical Purposes Regulations. It recently merged with Bedrocan, another authorized licensed Canadian producer.
  • OrganiGram (TSXV:CGI) — A medical marijuana delivery service for patients and doctors in Canada; also an authorized licensed producer.
  • Mettrum Health (TSXV:MT) — A Canadian cannabis grower also on Health Canada’s authorized licensed producers list.
  • CannLabs (OTCMKTS:CANL) — Full-service cannabis testing lab for both medical and non-medical-grade cannabis products.
  • Pazoo (OTCMKTS:PZOO) — Medical cannabis testing and certification operation in the US.
  • Zynerba Pharmaceuticals (NASDAQ:ZYNE) — A pharmaceutical company looking to develop next-generation synthetic cannabinoid therapeutics formulated for transdermal delivery for patients with significant medical need.
  • Cannabics Pharmaceuticals (OTCMKTS:CNBX) — A US-based cannabis stock focused on developing advanced cannabinoid-based treatments and therapies.
 

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Ancillary cannabis stock picks

These companies have interests in the cannabis sector, but are not focused primarily on the industry and hold interests elsewhere. That means they are often able to avoid legal issues and can operate anywhere.


  • AeroGrow International (OTCMKTS:AERO) — Creator and manufacturer of Miracle-Gro AeroGardens.
  • GW Pharmaceuticals (LSE:GWP,NASDAQ:GWPH) — British biopharmaceutical company known for its cannabinoid medicine Sativex, used for the treatment of spasticity due to multiple sclerosis.
  • Insys Therapeutics (NASDAQ:INSY) — Specialty pharmaceutical company working to develop cannabinoid medicines, such as its inhaled synthetic pharmaceutical cannabinoid products.
  • Heliospectra (OTCMKTS:HLSPY) — LED lighting systems company that creates LED grow lights for greenhouses, indoor growers and researchers.
  • Cafe Serendipity (OTCMKTS:CAFS) — Creating a unique name and brand for the legal cannabis industry.
  • Ambient Water (OTCBB:AWGI) — Formerly AWG International, this company pioneered atmospheric water generation technology for extracting water from humidity in the air.
  • Abbott Laboratories (NYSE:ABT) — Big pharma company with interests in the cannabis space and pharmaceutical products that contain cannabinoids.
  • Blue Line Protection Group (OTCBB:BLPG) — Security company that offers services to cannabis dispensaries.

 
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.
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Multi-state cannabis leader highlights events, partnerships, and activities to coincide with Juneteenth holiday

Trulieve Cannabis Corp . (CSE: TRUL) (OTCQX: TCNNF), a leading and top-performing cannabis company in the United States and its dispensary group Solevo Wellness, today announced the sponsorship of expungement clinics in Pittsburgh, Pennsylvania as well as additional initiatives celebrating the Juneteenth holiday.

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A summertime series of expungement events, employee volunteerism, documentary filmmaking, fundraising and more demonstrate the importance of commitment to reform and restorative justice to build an equitable, inclusive cannabis industry

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Florida’s legal cannabis program has gained plenty of investor attention as the potential for this segment of the US cannabis market continues to expand.

The US cannabis industry is largely fragmented because the plant remains illegal at the federal level. Despite that obstacle, several states across the country have implemented medical and recreational cannabis legislation allowing for cultivation, processing, commercial sale and consumer use.

While this legislation differs greatly from state to state, one state’s medical cannabis industry has seen unprecedented growth: Florida.

 

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The coastal state’s journey to cannabis legalization has been a challenging one. In 2016, over 70 percent of Floridians voted for a constitutional amendment to allow the use of cannabis for medical purposes.

However, in the 2017 legislation that created the state’s legal medical cannabis framework, then-Governor Rick Scott banned smoking medical cannabis. It wasn’t until March 2019 that Ron DeSantis, the current governor of Florida, lifted the ban on smokable marijuana.

In the face of those challenges, the Sunshine State has developed one of the most attractive medical cannabis markets in the country. In fact, Florida’s medical marijuana space is one of the fastest growing in the country.

Read on to learn more about the investing opportunities in Florida’s legal cannabis space and the top marijuana stocks to look out for.

Florida medical cannabis: High-growth market

Florida’s large population — the third biggest in the US — is a factor in the attractiveness of its cannabis market. The state is also the fourth largest economy in the US with a gross domestic product of just over US$1 billion in 2020.

A 2020 report from Arcview Market Research and BDS Analytics shows the US legal cannabis industry is expected to grow by 18.2 percent between 2019 and 2025 to reach US$33.9 billion. Florida ranks among the jurisdictions that will contribute the most to that growth.

“The Total Available Market, or TAM, is one of the most critical factors for any industry,” states Dustin Robinson, founding partner of Mr. Cannabis Law, in an article written for Green Entrepreneur. “Florida’s marijuana industry happens to have one of the strongest TAMs in the world.”

As of a June 2021 update from Florida Health’s Office of Medical Marijuana Use (OMMU), the state had 569,450 qualified medical marijuana patients and 2,542 qualified physicians.

Florida’s patient count is a small percentage of its population of 21 million, but it has been steadily growing since the drug was legalized in the state in 2016. In fact, the patient figure has more than doubled in the past two years.

According to Robinson, there are almost 300 retail locations in Florida, with another 500 locations expected by the end of 2022.

Beacon Securities analyst Russell Stanley has said Florida boasts a healthy list of addressable medical conditions that can be treated with cannabis, unlike the medical marijuana programs in other states.

“Some other states have had trouble expanding their programs, in part because it’s been very difficult for patients to get access to product,” Stanley told the Investing News Network. “Other states have had restrictions on which healthcare practitioners can recommend it and what they can recommend it for.”

 

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Florida cannabis market: High barriers to entry

The 2017 Florida medical marijuana law established a cap on the number of medical marijuana dispensaries and required that each center be vertically integrated — they all had to manage their own operations, from cannabis cultivation and processing to distribution and sales.

The cap on the number of dispensaries expired in April 2020. While the vertical integration requirement portion of the law underwent a three year court battle, the Supreme Court of Florida recently upheld the legislation, meaning this requirement will continue to shape the Florida cannabis market for years to come.

During a panel discussion, Steve Hawkins, CEO of Horizons ETFs Management (Canada), said he views vertical integration as one of the key benefits for US companies compared to the Canadian cannabis market. Only players that have been able to develop cannabis production, manufacturing and distribution capabilities can compete in the marketplace.

As of March 2021, the state had 22 licensed medical marijuana treatment centers (MMTCs) and five laboratories licensed for third party testing. The low number of licenses currently awarded creates high entry barriers, which is a big plus for the currently operating companies that have already established a strong foothold in the market.

Robinson believes that “the 22 Licensees are in a great position to build multi-billion-dollar companies in Florida’s growing marijuana industry.”

These 22 established licensees will also have an advantage if and when recreational cannabis becomes legal in the state. “In Florida, the medical marijuana license allows the current MMTCs to build out as big of a footprint as possible in preparation for adult use (recreational) legalization,” he said.

Florida cannabis market: Top Florida cannabis stocks

As the legal cannabis industry grows in Florida, some players have begun to stand out in the state.

Florida native Trulieve Cannabis (CSE:TRUL,OTC Pink:TCNNF) holds the lion’s share of the market and has continually been a top-performing stock in the state.

Trulieve opened Florida’s first medical marijuana dispensary back in 2016, and since then it’s grown into a force in the industry, with a current market capitalization of US$5.52 billion.

As of June 4, 2021, Trulieve had 82 dispensing locations in the state, according to data released by the OMMU. In one week’s time it sold more than 76.5 million milligrams of tetrahydrocannabinol (THC) products and 1.6 million milligrams of cannabidiol (CBD) products, in addition to 32,295 ounces of dried flower.

Shortly after smokable marijuana was legalized, Trulieve began selling flower and was the first in the state to do so. Trulieve has also benefited from a vertically integrated structure that includes cannabis cultivation, production and distribution, which is essential since cannabis cannot be moved across states lines just yet.

Surterra Wellness comes in at a distant second place with 39 dispensing locations and sales of over 22.2 million milligrams of THC products and 1.6 million milligrams of CBD products, in addition to 6,911 ounces of dried flower. Surterra is owned by Parallel, one of the largest privately held multi-state cannabis operators (MSOs) in the country.

 

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Parallel recently announced its intentions to go public through a definitive business combination agreement with Ceres Acquisition (NEO:CERE,OTCQX:CERAF), a special purpose acquisition company.

Another big player in the state is Massachusetts-based Curaleaf Holdings (CSE:CURA,OTCQX:CURLF). Though not native to Florida, Curaleaf’s presence in the state’s cannabis business is substantial. Of the MSO’s total 101 dispensaries, 37 are in Florida, putting it in third place behind Trulieve and Surterra.

The vertically integrated company also launched the state’s first medical cannabis tablets in September 2019, followed by the first sublingual tablets in July 2020.

Curaleaf put up impressive revenue numbers for 2020, reporting retail revenue of US$423.2 million compared to US$138.7 million in 2019. The company attributed the 205 percent increase to new store openings in its operating states, including five opened in Florida in 2020.

Liberty Health Sciences, which was acquired by Ayr Wellness (CSE:AYR.A,OTCQX:AYRWF) in February 2021 in all-stock transaction, also has a considerable stake in Florida. According to the OMMU, Liberty currently has 36 dispensing locations in the state.

Ayr Wellness plans to increase that footprint to 42 dispensaries by the end of 2021, and has a target of roughly US$4 million in annual retail revenues per store for 2022. In May 2021, the company announced the launch of its Origyn premium concentrate line in the state. The product line includes wax, crumble, Rick Simpson oil and shatter. Ayr has also begun construction of a 10 acre outdoor cultivation expected to be completed in Q3 2021.

Florida cannabis market: Investor takeaway

As its medical marijuana industry continues to grow, Florida has a lot to offer in terms of investment opportunities. BDS Analytics projects that Florida’s medical cannabis market will hit US$1.5 billion in sales in 2021, up 53 percent over 2020 sales.

The research firms predicts that recreational cannabis could be legal by 2023, which would set Florida on a path to become the third largest US legal cannabis market by 2026. Regardless of whether adult use gets the green light that soon, investors should still consider the Sunshine State as a premier cannabis jurisdiction.

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The latest dispensary, located in the Florida Keys, supports Trulieve’s goal of ensuring medical cannabis patients across Florida have safe, reliable access to the medications they rely on. The Tavernier dispensary joins the nearby Key West dispensary, as well as several others throughout the Miami area.

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