Everything you need to know about the booming cannabis industry
While cannabis in all its forms is still banned if not persecuted around the world, as of late, the marijuana market has been rapidly expanding into the fastest-growing industry with annual revenues upwards of $100 billion and plenty of room to grow.
Breaking it down
Cannabidiol and Tetrahydrocannabinol, or CBD and THC respectively, are the two most popular cannabinoids found in the marijuana plant and they serve two distinct purposes. While THC is the compound that makes cannabis users high and provides all the psychedelic and mind-altering effects, CBD is the one that is mainly focused on medicinal purposes like reducing pain and inflammation with ointments and other topicals or providing relief from nausea, tremors, and seizures in persons with debilitating neurological diseases.
The whole cannabis industry depends on two marijuana plants – hemp and cannabis. Both marijuana plants can give us THC and CBD, but hemp is extremely low in THC and high in CBD. However, while CBD in hemp is found in higher concentrations that THC, a very high amount of hemp plant matter is needed in order to extract a meaningful quantity of the CBD cannabinoid though it’s still the much less costly approach.
In truth, the hemp plant has many more applications than just CBD derivatives like ointments, tinctures and inhalants. It’s an incredibly versatile product for industrial purposes and with the farm bill approved by the US senate in 2018 which legalized the production of hemp, we are witnessing its resurgence across most states in the in-country.
Whether wholly recreational or only for medicinal purposes, there are at least 32 states in the US that have legalized the use of marijuana in order to benefit from the attractive revenue potential. The Colorado state, being the frontrunner, in terms of embracing marijuana and providing a proper regulatory framework that encourages businesses taking part in the marijuana industry has reported $1 billion in annual revenue from marijuana – curbing black market sales and injecting the newfound proceeds into education, healthcare and social services.
Now, other countries across Europe and Asia are poised to follow suit. With the demand for cannabis products being on the rise, several companies have been incorporated to take advantage of a voracious appetite and demand for the plant’s high-inducing flowers and other derivatives.
Cannabis stocks to watch
Some of the best-performing stocks in the cannabis industry are from Canopy Growth, Aurora Cannabis, and GW Pharmaceuticals.
Canopy Growth being the largest producer of cannabis in Canada is of course the number one stock in North America with $12.242 billion market capitalization. The company provides most government-regulated companies in the industry with cannabis flowers and plant matter in order to be processed into tinctures, inhalants and edibles.
Aurora Cannabis is another Canadian cannabis producer that is quite promising but admittedly, the company hasn’t sold more than $130 million in marijuana for the last year. While this may not be the best of signs, the truth of the matter is that Aurora is positioned to become the largest distributor of marijuana in the US and abroad. The company is after contracts with foreign suppliers and is making inroads in Europe with its medicinal CBD oil offering which is held to the highest possible standard.
GW Pharmaceuticals is a British pharmaceutical cannabis company that focuses on developing CBD medicine and derivatives. Its historical performance has been incredible and its CBD-based seizure relief drug, Epidiolex, has been in high demand and approval for distribution in Europe is expected to come soon as well.
Should you invest?
With such rapid growth and opportunity, investment in the cannabis industry seems like a no-brainer. The numbers speak for themselves and if you consider the fact that the industry is worth close to $100 billion in the US alone, with projections placing that number at an even $1 trillion in a few years – the answer to the question is a tentative yes. You should note that this is an emerging market and still quite volatile. It’s true that some companies have lost more than a third of their value in just the first half of 2019 and there also the uncertainty regarding regulatory measures, logistics, and excise taxes.
On the other hand, as long as legal companies continue this rapid growth while providing more customer-friendly channels of supply, we can see even further transition of cashflow from the black market, especially if cannabis finds itself legalized on a global scale.