Overview of the Cannabis Industry and Companies to Invest in

The cannabis industry has been on an upward trend in recent years, hand in hand with the regulatory and legislative boom in many countries around the world. As a result, investors have increased their interest in this industry, which was previously relegated to the sidelines.

Thus, marijuana, which integrates more than 10,000 different uses, has ceased to be a simple drug to become a robust market, with a value of 37.4 billion dollars in 2021, according to The Global Cannabis Report.

Today, in the United States alone, 33 states have legalized the use of said plant for medicinal use, and 16 have authorized its recreational use. In 2018 Canada also legalized its retail sale, which boosted the shares of companies in the sector. Both countries generate the most revenue from cannabis for medicinal use: the United States (10,000 million dollars) and Canada (5,500 million).

In Mexico, the medicinal use of marijuana was approved in 2017; however, regarding the approval of its ludic use, much has been speculated and ultimately, it is a path that is not yet concluded. In this regard, Xebra Brands was the first company in the country, authorized to legally plant cannabis with less than 1% THC concentration for industrial use. This through an injunction granted at the end of 2021 by the Supreme Court of Justice.

The Canadian company focused on the cultivation and development of this type of products has a presence in more than 46 countries, and has a range of products ranging from personal care to recreational products, such as infused beverages. It also has a genetic seed bank with more than 150 cannabis cultivars, in addition to holding the exclusive license to the only patent for the solubility of cannabinoids in water.

The company has been operating since 2018 in Canada and Colombia, and in 2020 it started activities in Holland, where it was selected by the government of that country to participate, along with four other companies, in a medical cannabis cultivation project, which would generate revenues of up to $80 million.

Investing in the Cannabis sector

Part of a good investment strategy in cannabis stocks is to know the different areas and products in which companies operate, whether for medicinal, recreational or other uses.

There are a large number of companies and Exchange Traded Funds (ETFs) specialized in this plant, among which we can find the following:

• ETFMG Alternative Harvest ETF (NYSE: MJ), is the first ETF focused on cannabis listed in the United States, the largest and most liquid in the market, with more than 567 million dollars in assets. It is also considered a passive ETF that tracks the performance of companies within the medical and recreational marijuana ecosystem.
• The Medical Cannabis and Wellness UCITS ETF, is the first medical cannabis ETF in Europe and tracks the performance of publicly traded firms with business activities in the medical marijuana, hemp and CBD industry.
• The Rize Medical Cannabis and Life Sciences UCITS ETF (FLWR), is an ETF that tracks marijuana-derived medicines and wellness products. It seeks to invest in companies in the biotech, pharmaceutical, medical, hemp and CBD sectors.
• Canopy Growth Corp (CGC), is a Canadian company whose production acreage is over 50 hectares. It started trading on the Toronto Stock Exchange under the ticker WEED, and became the first marijuana producer in North America to be regulated and listed on the stock exchange.
• Cronos Group (CRON), is a cannabis producer and distributor based in Canada. It began trading on the NASDAQ in 2018, and that same year to trade on the Toronto Stock Exchange. Its sales have soared by as much as 285 percent.
• Tilray Corp (TLRY), is a pharmaceutical-focused company and one of the first to receive a cannabis cultivation license from Health Canada. Also, it was one of the first companies in the industry to be listed on NASDAQ, in 2018.
• Aurora Cannabis (ABC), is a Canadian cannabis producer, operating in 25 countries. It debuted on the Toronto Stock Exchange in 2017 with ticker ABC.TO and, joined the New York Stock Exchange in 2018.
• Village Farms is a supplier of fresh produce to supermarkets and retailers in North America. It has made inroads in the cannabis and CBD categories in the United States and Canada, as well as in select markets internationally. Its subsidiary, Pure Sunfarms, is one of the largest cannabis companies in the world.
• HEXO Corp (HEXO), creates and distributes recreational cannabis products in Canada. In 2018 it caught the markets attention when it announced an agreement with Molson Coors Brewing Co (TAP), a major spirits company, to develop marijuana infusions.
• Imperial Brands, maker of Davidoff and Gauloises cigarettes made its largest investment three years ago in the cannabis sector, with a £75 million deal to acquire a stake in Canadian company Auxly Cannabis Group.