Cannabis Investments – The Complete Guide

11 minutes

Introduction

The cannabis industry has been recently identified as a billion-dollar industry as it is being used in pharmaceuticals, healthcare, and agriculture. Several public companies are buying medical marijuana-based businesses to step foot in this industry. Many countries are legalizing the development and use of marijuana, which is creating a lot of interest in people in business to invest in this marijuana industry. In 2018, public and private cannabis businesses raised $13.8 million, while in 2017, it was $3.5 Billion. Canopy Growth, Tilray, and Cronos Group have sold the shares as much as Bitcoin. It is a new and growing industry, that’s why investors don’t have enough knowledge of this market. In this guide, you will find some important information if you are willing to step foot in the cannabis market.

What is Medical Cannabis?

The Cannabis Sativa or Cannabis indica plant for medical purposes like treating diseases or relieving symptoms is known as medical cannabis. It has been in use for medical purposes for centuries until the early 1900s. People have mixed opinions about the use of marijuana as medicine.

What are THC and CBD?

THC and CBD are compounds found in marijuana. These compounds are used for medical purposes, and there have been several on-going types of research to figure out more medical benefits of these two compounds.

THC

Also known as tetrahydrocannabinol is a psychoactive compound. Because of this compound, people use it for the drug as it is responsible for giving ‘buzz’ while taken by addicts. There are two synthetic forms of THC known as dronabinol or Marinol and nabilone or Cesamet. FDA approves these two drugs to avoid nausea and vomiting for the patients receiving chemotherapy.

CBD

Unlike THC, CBD (cannabidiol) is not a psychoactive compound but is also a compound of marijuana. CBD is the main compound that is used as a medicine for a lot of symptoms and diseases. For instance, a CBD oil extract named Epidiolex is in clinical trials to treat epilepsy.

It is predicted in a new report by Grand View Research that by 2027, the global legal marijuana market will reach $73.6 billion. In this period, it will expand at a CAGR of 18.1%. The main reason for the growth of this market is the legalization of marijuana for medical and adult-use.

CBD Products

According to the prediction of industrial analyst BDS Analytics, by 2024, the US CBD market will reach $20 billion in sales. In 2018, the sales were around $1.9 billion, which means by 2024 it will be a huge increase in their sales. In other words, the market will grow by an impressive 49% annual growth rate.

Society is also accepting CBD in today’s culture and becoming more optimistic about the use it. Most people use CBD to relieve headaches, treat insomnia, decrease stress, and for many more medical uses. Several gas stations and stores are now selling it regularly.

The industry is growing faster, and there are many upcoming future trends to look forward to including more pharmaceutical CBD products, increased potency of products, and specific licensed CBD stores. Online CBD stores and third-party e-commerce platforms will also increase the sales of CBD products. Even now, 60% of CBD products are selling through online stores.

CBD is a growing industry; that’s why there are new CBD products every day in the market. If you want to step foot in this market, there are several CBD products that you can consider starting your business with.

Cannabis investment video explanation

Video explanation about cannabis investment

1. Sublingual Tinctures

Sublingual tincture is an oil formulated from CBD. It comes in the packing of a small bottle with a dropper. This product is taken by injecting it under the tongue. Then wait for the oil to absorb.

2. CBD Edibles

CBD edibles are one of the most popular and growing products of the CBD market. It comes in the form of baked goods, candies, and foods. Even though it has to follow many rules and regulations from the USA FDA, this product can still be found commonly.

3. Vape Concentrates

Vape also concentrates a popular and common product of CBD. You can use this product with electronic vaporizers and can inhale the product through it.

4. CBD Topicals

CPD topical is a very useful product that comes in Gels, Creams, and Sprays to treat aches and pains. You can apply these products directly to the affected part of the body.

5. Capsules and Pills

These products are used to treat digestive problems and seizures. Patients can take these capsules and pills directly with water.

It is also to be noted that CBD products are not only limited to humans. Many pet stores have CBD products to calm your pets down.

Check out our industry coverage

Cannabis Sector Breakdown

Cannabis Industry is based on many sectors that are participating in the growth of the medical marijuana industry. Following are the sectors involved in the Cannabis business:

  • Growing
  • Processing
  • Retail Shop
  • Lab Testing
  • Delivering
  • HEMP/CBD

Cannabis Industry Driver

The cannabis market is forecasted to grow rapidly in the coming years. Following are the seven drivers that will make sure that this industry grows:

  • Positive change in regards to cannabis legalization
  • Government rules and regulations of cannabis products will allow companies to formulate several types of products and develop different offers.
  • As the sophistication of the cannabis market is growing, the profit will be split between every sector. It means that from extractors to processors, everyone will be benefiting from the cannabis business.
  • The cannabis market is becoming more established, which brings in institutional investors. This factor will push the companies to deliver profit. Those companies who are unable to adapt to the new changes will have to push themselves towards mergers.
  • Now many financially strong companies are participating in the industry. This will not only help grow the market financially but will also improve the quality of the products. LPs can find themselves moving away from vertically-integrated business models because of the new participants in the market.
  • The medical and adult use of marijuana can be legalized internationally. This factor will provide more opportunities for cannabis companies. There will also be new challenges in the export of the products, which will lead the companies to partner with other companies to achieve joint success.
  • The medical field research will push doctors and physicians to spread awareness about the advantages of cannabis for treating several conditions. Insurance companies will also start offering the availability of cannabis to the patients. This will lead the companies to formulate strategies to ensure that their products are available in a certain area.

Medical Cannabis Stocks

The doctor prescribes medical cannabis to treat several conditions. The most popular conditions that can be treated by cannabis are Alzheimer’s, nausea, pain, several mental conditions, and sclerosis. Patients can only use and buy cannabis if and only if their doctor has prescribed it.

Since 1996, when California became the first state to legalize medical cannabis, the cannabis industry is growing. According to research conducted in 2018, Sanofi Aventis and Merck are the top companies to have the license to produce cannabis. Other companies are using cannabis for producing medical-related products, including GW Pharmaceutical, Tilray, Corbus Pharmaceutical, Cara Therapeutics, and Zynerba Pharmaceuticals.  

Medical marijuana stocks are similar to Pharmaceutical stocks, which means that investors should focus on the company’s pipeline of drugs and research. Cannabis is new to the medical industry, so it is safe to say that investors should have to wait to get their profit returns. Even GW Pharmaceuticals has to research for 19 years before launching their first product. FDA approved Epidiolex in 2018 to use medical marijuana to treat severe cases of epilepsy. Still, the company is not approved for the full use of medical marijuana because DEA still considers marijuana as a controlled substance.

If you want to buy stock in this sector, you can buy it easily as many companies are listed on several stocks exchanged like Toronto Stock Exchange. Other countries are traded over-the-counter. Alternative harvest ETFs can also be used to invest in this market, including GW Pharmaceuticals and Tilray.

Recreational Marijuana Stocks

Recreational marijuana deals with THC, which is used to get high that marijuana is known for. Just like any other industry, there are also stocks available for recreational marijuana. There are multiple products of recreational marijuana, including marijuana-infused beer and coffee to cigarettes. Canada’s Canopy Growth is the most famous company known for recreational marijuana. The stock price for this company closed at $28.92 per stock on December,8,2020. It had a market cap of $10.729 billion. The total annual revenue of the company was $398.77 million in 2020. In 2019, the annual revenue generated by the company was $226.34 million.

Invest in Marijuana

There are many ways to invest in the weed industry but we are going to focus on the following:

Cannabis Stock Investment

You can invest in any model of  gaming through stock investment. It means that you can buy shares of a particular company that you think has the potential to grow in the future. In this way, you will be making a profit from the company as the company grows. You will also become a shareholder or partner of the company after you invest in one. You can explore all the most relevant pots stocks via eToro Cannabis Care Stocks

Top online brokerage platforms

Cannabis Pre-IPO

Pre- IPO (Initial Public Offering) is investing in a company by  units of stocks. The companies offer this selling of the stocks before the stocks are made public. Because you will be buying huge blocks of stocks, it means more risk is involved in this. That’s why companies offer a discount for the buyers in Pre-IPO placement.

If you want to learn more about IPO investment, you read more about it in our IPO Guide.

You can Invest through trusted online pre-platforms such as Equitybee, Sharespost, and EquityZen.

Investing in pre IPO companies is risky yet beneficial. If you choose wisely and make the right investment, you can make huge money through pre IPO investment.

Medical Cannabis Copyportfolio Investment

Interested in CopyPorfolios?

67% of retail CFD accounts lose money

Copyportfolio is one of the premium services by eToro. This is an advanced version of copy trading. The  Cannabis Care by eToro is specifically designed for investing in marijuana. The main aim of this is to reduce the risk and benefit the current market. The Copyportfolio is rebalanced every quarter to adapt to the best investing strategies. Each instrument in Copyportfolio is counted as a single trader, and each trade depends on the percentage of funds you have. It is similar to copying another trader. The minimum investment starts from $1000, invest in Cannabis funds today.

invest in cannabis

Cannabis Industry Returns

By the end of 2020, eToro ‘‘CannabisCare’’ generated a loss of  -5%. Saying that only in the first 2 months of 2021, the fund generated over 67%. The average gain of the copyportfolio since it went live on eToro generated an average 11.59% between 2017-2020. 

Summary

The medical cannabis industry is growing rapidly around the world. The cannabis industry has been gradually growing over the years since Cannabis came by legal purchase. The environment in this industry is one of the more risky to work in. As the industry grows and expands, it will continue to become more popular. There are many different ways in which you can invest in this industry. Examples of those would be stock investment, pre-IPO investment, or investment in a copy portfolio.

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