The Only Marijuana Stock to Buy That Isn’t Going to Pot
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We just saw this morning that cannabis investor Privateer Holdings has taken in an additional $40 million in funding for investing in the increasing legalization of marijuana. Legal cannabis sales are expected to hit over $6 billion this year and are expected to approach $22 billion by 2020. This had us thinking, is there any good pure-play marijuana stock out there?
People didn’t seem to appreciate the several articles we wrote earlier this year warning investors about not investing in OTC marijuana stocks. We thought it was important to warn investors because FINRA warned about this and they’re… well, OTC stocks which no serious investor would touch with a ten-foot pole. Nonetheless, we received some serious verbal backlash and some examples of this critical commentary can be seen below:
- CGC +50% up and on TSX now. This was shitty article
- Totally missed the mark on this one bud. Back to class for you.
- Absurd article. Internet trash.
Stoners. You just can’t seem to get through to them (rolls eyes). Now while legalizing marijuana didn’t make the cut in our list of 30 emerging technologies investors should watch, we’re going to grandfather it in because it has some serious potential as a disruptive market and there is some huge interest in this theme from a whole bevy of stoned investors. And let’s be frank, these are some of the investors that need help the most. Plus, marijuana stocks are just a whole lot of fun to write about because you can interject all kinds of dope puns into your writing (see what we did there?).
So we took the advice of one of our lovely readers and decided to take a closer look at a marijuana stock called Canopy Growth Corporation (TSE:CGC) that has begun trading on the TSX. Note that Canopy Growth also continues to trade on the OTC market under the symbol TWMJF. Since CGC began trading on the TSX, shares are up +115%. We must be careful not to confuse share price appreciation with a good long term investment as people are often prone to do. Let’s take a closer look at what sort of company lies underneath these rapidly appreciating CGC shares. (Note: All numbers below are in USD).
About Canopy Growth
The significance of Canopy Growth is that they claim to be the first federally regulated, publicly traded cannabis producer in North America and the only cannabis company listed on a major global stock exchange. From what we’ve seen, there seems to be no reason to disagree with that statement. Let’s not forget that marijuana is illegal in most U.S. States and in a majority of countries around the world so we’re a long way away from seeing our first marijuana IPO. Canopy Growth operates four production facilities in Ontario and distributes marijuana across the country to Canadian patients managing a host of medical conditions. The first thing we noticed when looking at this $600 million company is that they are selling a lot of weed.
So in their best month this year so far they sold 661 pounds of marijuana. With 16,500 customers this works out to 18 grams a month or 5.2 eights a month which is a lot of weed being consumed. Marijuana is not technically legal in Canada so these are all “medical marijuana” users. Since last year they added 12,800 customers so there must be something in the water that’s making everyone get so sick all of a sudden. On April 20, 2016, the Canadian Federal Government announced its intention to introduce, by the Spring of calendar year 2017, legislation to legalize the recreational use of marijuana in Canada. Canopy Growth sees this as a 7-10 billion dollar market. The Company is also starting to pursue international expansion and they’ve even partnered with Snoop D O Double G which bodes well for an expansion into the U.S.:
Considering that they only sold their first bag of weed as recent as 2014, CGC appears to be on a tear. A peek into CGC’s last financial filing as of June 2016 shows that they have $14.5 million in cash on hand with just $2.6 million in long term debt. Their last fiscal quarter shows they took in revenues of $5.2 million and incurred losses of around $3 million.
If you’re thinking about investing in marijuana stocks, there aren’t many options available. As Canopy Growth claims, they seem to be the only pure-play marijuana stock traded on a major stock exchange at the moment. The biggest takeaway here is that this is a legitimate company from what we can tell that sells a lot of weed which is exactly what you want from an investment theme that focuses on the proliferation of weed. With increasing legalization, Canopy Growth stands to benefit as the only pure-play marijuana stock around.
Conclusion
We feel the need to remind everyone that you should never put all your eggs in one basket with any stock and that this marijuana stock should just be part of a diversified portfolio and not the only stock you hold. If it comes crashing down after the recent run, don’t panic. As an investor, you should be in this for the long run. If CGC blows up and you lose all your money, just take the advice of a wise sage named Calvin Cordozar Broadus Jr. who once said “Sometimes a loss is the best thing that can happen. It teaches you what you should have done next time“.
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And what about APH or wise oracle?
We consulted the wise oracle and he said that APH is a really good find.
A cursory look at the APH financials shows that they had revenues of $3.26 million USD for Q1-2017 compared to $5.2 million USD from CGC. APH sold 585 kilos in their last quarter while CGC sold 300 kilos in their best month. APH is touting the fact that they are profitable for two consecutive quarters which is a real plus.
We’re going to put this in our queue and the oracle will write an article on this soon. It looks like a legitimate stock and it’s important to single these out when you have probably 100s of scam OTC stocks out there.
have never bought stocks please help want cgc
I never bought stocks before and don’t know how to get started . These stocks sound great ! Can you help me get started ? I don’t want to get burned
For you guys asking about how to buy stocks, we use Interactive Brokers (IB) and Motif Investing. We wouldn’t recommend IB if this is the first brokerage firm you have used.
If you just want to trade U.S. stocks (and no OTC), then use Motif Investing. Here’s our article on why we like them:
https://nanalyze.com/2016/09/best-online-brokerage-motif-investing/
If you want to buy the stock in this article (CGC), you need a broker that allows you to trade OTC or foreign stocks. With IB you can trade the foreign stock in CAD but that is not for beginners. The OTC issue is just an ADR so you can buy CGC on the OTC using the ticker TWMJF. It actually has good volume!
If you are only looking to invest in U.S. listed stocks, we recommend TradeKing. It’s one of the cheapest brokers around, they’re intuitive to use with good support, and you can get a isht load of free trades when you open an account using the below link:
Trade King Free Trade Offer
Just be aware that they charge a $75 fee for trading any Canadian listings that are trading on the OTC market.
Hi Nanalyze,
Is there any other site to buy these stocks. I tried trade kings and they said i cant. Also motif is not allowed for American citizens. And interactive brokers requires minimum 10k to open account which i can not do.
Thanks
Hi Darius,
Motif is allowed for American citizens only. Are you an American? If not, many of these brokerage firms will not let you setup an account. We have an international account with IB but as you said, their minimums are quite high (no pun intended).
Hello,
I am able to buy canadian stocks in etrade. Thanks for the help. Do you have an update to this article or more info on marijuana stocks to invest in?
Hi Darius,
It’s amazing how many people are just dying to invest in marijuana stocks when in fact the majority of these stocks are scams. Take a look at this article which covers growers:
https://nanalyze.com/2016/12/marijuana-stocks-growing-weed/
Note that we’re seeing a lot of potential coming from privately held startups in the USA that are not publicly traded. There is a holding company called Privateer Holdings that we’ll write more about in the future. This is where Peter Thiel has been investing.
Now that you are investing, make sure to go buy yourself an index ETF or some shares in solid companies like JNJ or 3M. You should only dedicate a small portion of your investments to extremely high risk themes such as marijuana stocks.
Great to see you can trade now!
Hello, a company I am interested in released financial data yesterday, but I would appreciate some feedback on it. It’s Mettrum Health Corp, and it looks like a legit company to me. Lots of patients and relatively low cap compared to others. Any thoughts?
Thanks for the blog.
Thank you for your comments and we appreciate the heads up on Mettrum Health!
A cursory look shows that they have growing revenues and decreasing costs. They appear to be a legitimate grower. Be sure to sign up to our newsletter as we’ll be writing about them in the future.
Please see the article published today which talks about all the growers including Mettrum!
https://nanalyze.com/2016/12/marijuana-stocks-growing-weed/
What are your thoughts for CV Sciences (CVSI) and Easton Pharmaceuticals Inc. (EAPH)? Thank you.
Hi Joel,
We noticed that you provided a link to some OTC stock promotion trash titled “Turn a Single $50 Bill Into a Massive Fortune” so we’re going to leave that there for everyone to see what they shouldn’t touch with a ten foot pole.
As for the two OTC stocks you mentioned, CVSI and EAPH, we can only assume that this is the same OTC garbage that the link you provided references.
In case we weren’t clear enough in our previous articles on avoiding OTC stocks like the plague, we’ll say it again. Avoid OTC stocks like the plague.
Thank you for bringing that up and stay away from that stuff mate!
Just wanted to start investing in a small way in marijuana stocks
Remember that you need money to make money. If you put in $1,000 USD and by some miracle manage to triple your money, that extra $2,000 isn’t exactly life changing. However if you smoke a gram of top shelf a week, that will get you free buds for almost 3 years. You could also just as easily lose that $1,000 too.
send info, please. How to buy marijuana stocks.
Hi Donald,
You’ll need to get a brokerage account first. Be extremely careful here. This environment is full of pretenders and the political risk is still high.
I am interested in IVITF for long term investment in a marijuana stock that is presently paying
a small dividend. My research is limited due to lack of information. I have a little mad money that
I can afford to lose. However, I do not want to blindly throw money away.
Thank you for your time and info.
mac
Hi Mac,
We’re not in the business of telling you what to do with your money but rather providing you with the information to make that decision yourself. The ticker you provided is some sort of weird $5 million market cap OTC company that should be heavily researched. You said your “research is limited due to a lack of information”. Don’t invest in it then!
CBIS is a phenomenal Marijuana stock trading up 200% since October 2016.
Here is some of our research on CBIS:
https://nanalyze.com/2017/01/cannabis-science-cbis-scary/
Please stop recommending Tradeking for stocks like APHQF and TWMJF.
Tradeking will charge a $75 fee for both the buy and selling of foreign stocks that have a 5 letter ticker and end in J or F. These tickers indicate that there is a foreign settlement fee which will be charged to the consumer.
TD Ameritrade also has a fee for these types of OTC stocks, but it is $15 instead of $75.
You are going to cost your readers without them knowing it.
Thank you very much for raising this!
We use Interactive Brokers to trade foreign stocks and were unaware that TradeKing issues such a fee for trading ADRs. We will add this information to our comment above.
Nanalyze,
I thank you for taking time to breakdown the cannabis industry stock related to the TSX. Your insight was actually pretty good and I honestly thank you for that. I plan to buy stock in the cannabis industry and found this informative.
I will say a few things:
1) Your puns are lame.
2) Labeling investors in the cannabis game “stoners” as if we are all high all the time is fucking stupid.
3) Putting “medical marijuana” in quotes as if ALL the people who use it as medicine are dishonest about it is also fucking stupid.
4) You very much give the impression that you have never been in the know of cannabis culture (outside of stocks) and if you are you sound like a fucking Republican which, at this point in time, is worse than sounding like a pussy liberal.
5) And the fact that you actually wrote out Snoop D O Double G and put Snoop as the face of this article really solidifies your out-of-touch attempt to relate to cannabis investors and consumers.
Thank you for the info.
Thank you very much for your comment John. Sincerely, it is great to see people take the time to provide feedback. We’re handing this over to the writer who responded to your feedback.
Hiya John,
1) Yes, they are incredibly lame. It was Ricky Gervais who said that if the pun is the lowest form of humor, you cannot possibly get lower than the “drug related pun”. These were meant to elicit a groan, not a laugh.
2) The reference to “stoners” was in response to people who couldn’t recognize that someone was actually trying to keep them from losing money. It was said in jest as seen below:
Stoners. You just can’t seem to get through to them (rolls eyes).
3) It does not imply ALL and if you are immersed in cannabis culture, you will know how this sort of thing works. Frankly, everyone should smoke weed instead of popping pills.
4) Let’s not resort to boxing people into one corner or another. Never at any point should people bring politics into a discussion unless said discussion is about politics. I’ve sold weed, grown weed, and smoked weed, the latter being for most my life in a responsible manner while doing very meaningful things in society. Now that I’m older, maybe I’m out of touch. But I can assure you I know as much about cannabis culture as needed to intelligently talk about the topic.
5) I listened to Snoop growing up. I know every word to “Doggystyle” which came out when I was 18.
You make your points passionately and that is appreciated. You have not been the first person to complain about the use of the word stoners. That’s noted, but I won’t change who I am because people say I should.
I respect that. And I appreciate your reply. I would like to sincerely apologize for using profanity and bringing in the politics. In hindsight, I should’ve laid off of it. I do agree that you shouldn’t change who you are.
I am trying to learn about stocks and trading specifically with cannabis related firms. My approach was quite juvenile.
I actually felt bad about my reply. I hope you can forgive my transgression.
That’s perfectly fine John! Really appreciate your apology and we’ve seen much, much worse in some of our articles on OTC stocks, believe me! Unless someone is being completely unreasonable we always debate people on their points because there is no right answer. You make legitimate points about marijuana being portrayed in a negative light when we both know the real truth. At the same time, we have a reader base of investors who look at returns. They will (intentionally or not) help the cause by putting money behind the “marijuana industry” and we may eventually go in the same direction as Canada. Not all people feel the same way though about the topic though and we respect them equally. Thanks again for being very civil and engaging us in a productive conversation.
You’re welcome. I appreciate your reply and your professionalism regarding the matter. 🙂