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CANNABIS STOCKS ARE FAST BECOMING A FIXTURE IN\u00a0investor portfolios, but is now the right time to get involved as so much uncertainty swirls? The past two years have been volatile for every market sector, thanks to COVID-19 above\u00a0all else. The emerging pot market has admirably contended with the circumstances, federal legalization and other factors unique to this industry. Despite the substantial hurdles, cannabis is thriving. In 2021, global sales topped $37.4 billion, according to Prohibition Partners.\u00a0<\/p>\n
The growing sector\u2019s strong performances netted savvy early investors worthwhile returns. However, some sources caution that the climate of today\u2019s market may not allow for such returns and that those investing today should be prepared for the long haul if they want to see a profit.<\/p>\n
Publicly traded cannabis brands are growing in presence on various global exchanges. For multiple reasons, cannabis companies often list on international stock markets, such as the Canadian Securities Exchange. Another popular choice is over the counter (OTC) trading, which uses a broker network rather than a traditional central exchange.\u00a0<\/p>\n
Leading causes for shying away from the US giants\u2014New York Stock Exchange and NASDAQ\u2014often include worries over American federal cannabis regulations and mandatory share minimum criteria that companies may struggle to meet at this time. However, plant-touching and ancillary brands have found some success in this country.<\/p>\n
The array of listing options leaves brands and investors with various options. Going off market cap, Green Chip Stocks founder Jeff Siegel said investors have eight billion-dollar-plus companies to choose from as of January 2022: Curaleaf, Green Thumb Industries, Trulieve, Canopy Growth, Tilray, Cronos Group, Sundial and Aurora.<\/p>\n
Siegel said investors might want to look beyond the market cap when considering stocks. Sources listed dozens of smaller cap options that may prove beneficial to an investor\u2019s portfolio, with share prices often in single-digit sums.\u00a0<\/p>\n
Jumping into cannabis with singular stocks may not be ideal for those just learning about the market or those who don\u2019t have the time to keep up with the constant fluctuations of the market. Javier Hasse, the managing director for Benzinga Cannabis and co-founder of Spanish language cannabis site El Planteo, discussed how exchange-traded funds (ETFs) could be a viable investment that requires less sweat equity. When?<\/p>\n \u201cInvesting in stocks is already hard on its own,\u201d Hasse said. \u201cInvesting in a market that\u2019s still nascent and as volatile as cannabis is particularly hard.\u201d<\/p>\n Poseidon Asset Management co-founder and managing director Morgan Paxhia also touched on ETFs, noting their often-correlated activity, allowing investors to choose depending on their underlying investment strategies and other holdings. Some current industry-leading ETFs include AdvisorShares Pure US Cannabis ETF (MSOS), The Cannabis ETF (THCX), AdvisorShares Pure Cannabis ETF (YOLO) and Amplify Seymour Cannabis ETF (CNBS).<\/p>\n \u201cWe do believe over time that performance among the ETFs could meaningfully separate as we believe that the cannabis rising tide will lift seaworthy boats,\u201d Paxhia said.\u00a0<\/p>\n In late 2021, Poseidon launched their ETF with AdvisorShares under the name AdvisorShares Poseidon Dynamic Cannabis ETF.\u00a0<\/p>\n Cannabis saw a boom in 2019 and 2020 as much of the US market remained open after receiving essential status, leading to continued sales success. The spike helped the industry recover from a bear market that had dampened previous high expectations and canceled many previously announced mergers and acquisitions.<\/p>\n Some entities didn\u2019t perform well, especially those based in tourist locations, or medical ventures that saw intake numbers shrivel. That said, most US-based companies did perform admirably against the circumstances.<\/p>\n The pandemic and the market\u2019s ongoing maturity left Hasse torn on market movements. \u201cIt\u2019s still pretty early to tell how cannabis stocks as a group move in relation to markets,\u201d he said, adding that he hasn\u2019t seen direct correlations to economic cycles.<\/p>\n Others were more certain about market movements. Debra Borchardt, co-founder and executive editor of online cannabis stock publication, Green Market Report, noted that cannabis stocks typically \u201ctend to trade as a group despite some companies performing better than others.\u201d\u00a0<\/p>\n Jacqueline Bennett, managing partner at Highlands Venture Partners, offered a similar take. \u201cMaybe during earnings there\u2019ll be some type of reaction that\u2019s aligned with the performance of the underlying operation, but most of the time you\u2019re seeing the entire index moving in the same direction,\u201d she said. Bennett noted that the movement is indicative of economic and other macro conditions affecting the cannabis market.\u00a0<\/p>\n The circumstances can make share price valuations frustrating for investors. \u201cThe company may be reporting record sales numbers, but then experience a sell-off as other poorly performing companies bring the group down,\u201d Borchardt said. She added that \u201cstock jocks,\u201d or investors that trade for profit rather than underlying company ownership, can also harm stocks.<\/p>\n Like the pandemic, US regulations loom overhead, stunting the market\u2019s true potential for growth and return on investment. Under Presidents Trump and Biden, reform made little progress, save for the advancement of the MORE and SAFE Banking Acts in Congress. While their progress is symbolic of reform\u2019s rise, it won\u2019t do anything to improve banking or investment opportunities at this time. Analysts don\u2019t expect reform to occur under the current Congress or President Biden.<\/p>\n \u201cDespite this being a somewhat bipartisan effort and having constituent approval, Congress just hasn\u2019t been able to make headway and possibly won\u2019t in the near future, as other more pressing issues have had priority,\u201d Borchardt said.\u00a0<\/p>\n She said the ongoing regulations hurt businesses and companies struggle to find eCommerce vendors and secure banking accounts. \u201cPlus, if cannabis companies had access to the big banks, they could also have access to the major US stock exchanges,\u201d he said.\u00a0<\/p>\n The issues extend to trading as well. In November 2021, JPMorgan restricted brokerage clients from buying certain cannabis stocks, noting potential bank losses from private fund collapses. Despite ongoing industry restrictions and federal regulations, optimism remains high for the long-term.<\/p>\n \u201cWhile it\u2019s difficult to quantify the momentum\u2014or lack thereof\u2014with any particular piece of legislation, we fundamentally believe that cannabis legalization efforts, license issuance and consumption itself will continue to increase and support the industry overall as cannabis markets grow and scale,\u201d said Arden Lee, CFO of WM Technology, the operator of Weedmaps, a cannabis stock trading on the NASDAQ as a non-plant touching venture.\u00a0<\/p>\n All things considered; Bennett may have summed up the growth sector best when she said cannabis stocks are \u201canything but stable\u201d at this time.\u00a0<\/p>\n Investments are all about timing. Some early investors have already seen returns. Siegel took pride in his clients scoring big on early investments in Canopy Growth, Organigram and Aphria. However, he said those days are now gone and that investors may have to hang around to see positive results.<\/p>\n \u201cIf you got in at the top, you\u2019ll be licking your wounds for a while,\u201d he said, adding that safer players such as Curaleaf may produce some gains in 2022 for investors.<\/p>\n Paxhia believes the market is facing a difficult period where capital isn\u2019t flowing in like it was just a few years ago. The setback is coupled with substantial valuation compression. Today, cannabis companies compete for investor attention against other intriguing sectors ranging from tech to crypto and meta. Still, he notes that market prospects look bright.\u00a0<\/p>\n \u201cLong term, we still see a lot of opportunity, but this is coming from a firm that has been investing in the space for more than eight years,\u201d Paxhia said.<\/p>\n WM Technology\u2019s Lee offered a similar opinion on the market\u2019s future, noting that few if any \u201ctruly high-functioning cannabis markets\u201d exist in the US. \u201cFor example, there are more licensed cannabis businesses in Oklahoma than in California, yet California has four times the population and has legal cannabis,\u201d Lee said. He also sees a bright future down the line. \u201cThis opportunity will be unlocked with continued license issuance and new market openings\u2014which are questions of when, not if.\u201d<\/p>\n With the market struggling, now may be a smart time to get in. For now, \u201cThe prices have fallen so low, this might be a good time to invest,\u201d Borchardt said. She also noted ETFs as a potential pick.<\/p>\n Even with one\u2019s financial ducks in a row, the ever-evolving cannabis market can still trip up investors while it evolves and solidifies into the giant market we know is coming.\u00a0<\/p>\n \u201cBe mindful of how much capital you feel comfortable putting at risk here, as it is risky and volatile,\u201d Paxhia said.<\/p>\n This story was originally published in the\u00a0print edition<\/a>\u00a0of Cannabis Now.<\/em><\/p>\n The post Wall Street High<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
CANNABIS STOCKS ARE FAST BECOMING A FIXTURE IN\u00a0investor portfolios, but is now the right time to get involved as so much uncertainty swirls? The past two years have been volatile for every market sector, thanks to COVID-19 above\u00a0all else. The emerging pot market has admirably contended with the circumstances, federalContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":504,"featured_media":56784,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,505,1228,16413,170,16414,16415,16416],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/56783"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/504"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=56783"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/56783\/revisions"}],"predecessor-version":[{"id":56785,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/56783\/revisions\/56785"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/56784"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=56783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=56783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=56783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/cannabisnow.com\/wp-content\/uploads\/2022\/08\/Libby-Greene-NASDAQ.jpg\")
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