What are marijuana stocks?
Marijuana stocks are the shares of companies engaged in the cultivation, development, and supply of medical and recreational marijuana.
Why is interest in marijuana stocks increasing?
Steps toward regulation and legalization of marijuana in the United States and Canada have increased interest in companies in this sector.
Thirty-six U.S. states have legalized the use of this controversial plant for medicinal purposes, and sixteen have also legalized it for recreational use. On October 17, 2018, Canada legalized the retail sale of cannabis, boosting stocks in companies in the sector.
By trading marijuana stocks using derivative products, such as CFDs, investors can profit whether the stock is rising or falling.
How to invest in the cannabis industry?
To create an effective investment or trading strategy for cannabis stocks, it's important to understand the sector and the different industries in which the companies participating in this market operate.
Types of marijuana products
Broadly speaking, there are two types of products that are fueling the growth of this industry: medicinal and recreational.
Most companies are involved in the production and development of medical marijuana in the form of unprocessed plants and products made with cannabinoids, compounds naturally present in the plant.
Regarding recreational marijuana, this refers to marijuana used for non-medical purposes. If other countries follow Canada's lead and legalize recreational marijuana, more companies are likely to focus on this sector.
Types of marijuana stocks
There are a variety of companies specializing in different types of products. The three main categories of marijuana stocks are:
- Producers: These are companies that grow, sell, and distribute cannabis to consumers and businesses. Due to legal restrictions, US-based producers are not the main players in this category. However, Canadian producers have gained some notoriety since the legalization of the product in October 2018.
- Biotechnology: These companies are dedicated to the research and development of new products. Although they don't always work with plants, but rather with synthetic forms of the compounds found in them, biotechnology companies are included in this sector.
- Suppliers: These companies do not grow or develop marijuana or related products, but rather provide the tools and materials needed for marijuana cultivation, such as lighting systems, hydroponics, specific growing soil, and fertilizers.
The best stocks to invest in marijuana
The general and market interest in marijuana has led to significant growth in companies in the sector in recent years. Here are some of the most popular stocks in the marijuana sector.
- Canopy Growth Corp (CGC)
- Cronos Group (CRON)
- Aurora Cannabis (ACB)
- Tilray (TLRY)
- HEXO Corp (HEXO)
- Jazz Pharmaceuticals (JAZZ)
- Sundial Growers
- Associated British Foods (ABF)
This article is for informational purposes only; we do not recommend anyone invest in any of these stocks. We do recommend prior research into any investment you might make, and we recommend that these companies be a good option.
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