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.

 

Cannabis Market Could Reach $5.5B By End Of Year

 
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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

 
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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

 
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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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This is an updated version of an article first published by the Investing News Network in 2017.

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

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

 

Cannabis Market Could Reach $5.5B By End Of Year

 
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The evolution of the cannabis industry in recent years continues to outperform market projections. While many attribute this unprecedented growth and positive trending to a focus on business-to-consumer models, some cannabis companies are finding significant successes leveraging white labeling partnerships to tap into a rapidly emerging marketplace that thrives on innovative business models and unique products for a growing consumer base

As the popularity of white labeling services amongst cannabis companies grows, especially in the production of fast-growing categories of value-added products like extracts, oils, edibles, and vapes, companies that are becoming an expert in co-manufacturing and have the ability to provide these services are establishing themselves as the leaders in the industry. Used as a means to expand SKU lines as well as revenue, white labeling in the cannabis industry offers companies unparalleled upside and potential for impressive profitability.

How do white labeling services work?

White labeling is a business practice that involves one company manufacturing a product, which is later sold and advertised under another company’s brand. These solutions are typically done in exchange for a flat fee or percentage of product sales depending on the terms of the agreement.

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Ayurcann (CSE:AYUR) is a leading B2B post-harvest solution and provider focused on providing scalable custom processes and pharma-grade products to the medical cannabis industry in CanadaSend me an Investor Kit

This business-to-business solution offers a partnering company to attach their unique brand onto a “white label” product for marketing and sale to the final consumer and allows the manufacturing “white labeler” to potentially partner with different companies. Without the need to invest in infrastructure or technology. Cannabis companies can focus on building their brand and selling a wider range of products to a wide net of prospective customers.

Additionally, many also associate these white labeling solutions with toll processing, a practice in which one company provides the raw or partially processed product for another company to manufacture into a value-added product.

Access to extraction and packaging services through white label providers

White labeling services provide an ideal solution for companies who may not have the start-up capital to build a manufacturing facility, secure product licensing or have a difficult time getting a cannabis business off the ground. In these circumstances, partnering with a licensed processor that has established production and focused effort on creating a diversified range of high-quality cannabis products presents outstanding economic opportunities.

One leading example is  Ayurcann Holdings (CSE:AYUR), a B2B post-harvest solution provider focused on providing scalable custom processes and pharma-grade products to the recreational and medical cannabis industry in Canada. The company delivers a profitable business model of services and products. It operates three production divisions specializing in expert cannabis-based extraction and refinement, high-quality bulk oil sales and white label manufacturing.

White labeling options for cannabis companies

In an industry that is shifting its focus away from cultivation, more fully integrated companies delivering multiple verticals in cannabis processing and production offer an unparalleled investment opportunity that stands out from the rest. Major players in the cannabis white-labeling space offer unique exposure and retail footing that allow many companies to compete with established brands and quickly make an impact on consumers.

Ayuracann’s production offers full end-to-end outsourcing services, including proprietary product research & development, cannabis extraction & refinement and final production formulation and fulfillment. As a leading white labeling service provider, the company is focused on becoming the partner of choice for leading Canadian cannabis brands by delivering best-in-class, proprietary services, including ethanol extraction, formulation, product development and custom manufacturing.

Benefits of white labeling for cannabis companies

Data collected by Grand View Research projects the global legal cannabis market to be worth US$66.3 billion by 2025. While much of the cannabis product sold today is still the raw product, value-added consumer packaged goods are rapidly gaining significant traction throughout the cannabis industry.

White labeling services allow cannabis companies to capitalize on the latest and greatest cannabis consumer trends by expanding their portfolios to include high-demand products such as oil cartridges, extracts, topicals, CBD bath products and lotions, edibles and more. Without having to invest in the infrastructure, processing labs and manufacturing facilities required to make these products, companies can focus on releasing more products to an eager customer base. With an ever-evolving cannabis market, white label partnerships can give cannabis companies an edge over the competition.

While vertical integration can be a highly efficient strategy for large cannabis companies with the up-front capital to build the necessary infrastructure, companies without the resources to establish it take a huge risk by investing in operational and up-front costs. This includes time, building and equipment costs, license processing and finding specialized staff to grow and sustain the business.

Alternatively, outsourcing manufacturing allows a cannabis company to expand its product offerings, utilize quality formulations and establish its brand while reducing the financial risk associated with vertically integrating. Finding a compatible white labeling partnership means more time to build a brand and reach retailers and final consumers substantially faster. For cannabis companies who want to hit the ground running, white labeling offers the tools, expertise, and systems in place to make it happen.

Takeaway

Cannabis companies are using white labeling services to expand and diversify their product lines and tap into a market that is increasingly favoring value-added consumer packaged goods. For cannabis companies without fully vertically integrated operations, white-label partnerships with major players like Ayurcann Holdings offer exceptional economic efficiency and investing upside with minimized risks and infrastructural costs.

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