Looking to invest in the fast-growing industry? Do your homework.
Investing in cannabis companies continues to be a risky proposition: banking is dicey, the U.S. government appears to be shifting course and uncertainty clouds the future. The industry is shaping up to be a $22 billion by 2021 and is growing at 27 percent a year. Yes, there is money to be made as an investor, but the risk factors remain high.
From a pure financial view, not a lot has changed since Donald Trump was sworn in as the 45th president. But politically, the picture has become blurred.
Earlier this year, White House press secretary Sean Spicer said that he expects states to be subject to “greater enforcement” of federal laws against marijuana use. Although the statement was vague and seemingly void of policy, it had a chilling effect throughout the industry.
“While the cannabis industry has been anxious to gain more clarity into how President Trump’s Administration is going to treat the legal cannabis market in the U.S., it has also provided the opportunity for rigorous debate on the issue,” said Giadha Aguirre de Carcer, the CEO of New Frontier Data, a data analytics firm.
A Quinnipiac poll revealed that 93 percent of Americans support legalizing marijuana for medical purposes; 59 percent favor full legalization for adults. But popularity does not make for sound investment strategy. Serious investors seek clarity — something not found in the cannabis industry.
If you are looking to invest in cannabis, here are a few companies worth investigating:
- GW Pharmaceuticals is the maker of the experimental drug Epidiolex, which treats epilepsy. According to the company, there are about 470,000 children with epilepsy in the U.S. and about one-third of them will benefit from the drug.
- Scotts Miracle-Gro has been busy acquiring hydroponics companies in the U.S. Fertilizers, topsoil and other agricultural products are also needed in the fast-growing marijuana business.
- Insys Therapeutics is the maker of a drug that treats chemotherapy-induced nausea and vomiting. The THC-based drug Syndros was approved by the FDA last year.
- Corbus Pharmaceuticals makes Resunab, an experimental anti-inflammatory drug. The drug is still undergoing clinical trials, but it shows promise.