The burgeoning cannabis market, also known as medical marijuana and sometimes cloaked as CBD to evade Federal Law and SEC restrictions in the US, saw a revenue of over $51 billion in 2023 and a consistent growth rate of 14.95% projected until 2028 (Statista Market Insights). Cannabis, like gold pan handlers in the West or investing in Bitcoin, sounds scary but an alluring prospect for investors seeking portfolio diversification. How can you you navigate the dynamic world of cannabis stocks? Lesson #1: don’t invest in cannabis if you like to smoke. It will cloud your judgement.

Decoding Cannabis Stocks:

Investors in the cannabis sector can strategically choose to back medical, therapeutic, or recreational cannabis ventures. Those backing medical ventures listed with the FDA or Health Canada are more protected from restrictions that may be placed on banking or working between states and across borders. Cannabis is legal in Canada but not in all US States.

There are provisions for medical cannabis companies that work with the health authorities. It is also possible to make indirect investment opportunities arise by focusing on ancillary service and product providers rather than traditional growers and biotech companies. You could invest in hydroponic greenhouses or lighting companies, as an example. These companies may derive a majority of their business from cannabis growers, but they themselves are not cannabis companies.

Scotts Miracle-Gro (NASDAQ:SMG), for instance, is not a cannabis business per say, but they own cannabis businesses and have bought companies like General Hydroponics for its nutrient mixes it makes for cannabis growers through Hawthorne. With more than $2 billion in worldwide sales and more than 6,000 associates, The Scotts Miracle-Gro Company, through its wholly-owned subsidiary, The Scotts Company, LLC, is the world’s largest marketer of branded consumer products for lawn and garden care, with products for professional horticulture as well. They also own a lot of liability for distributing Roundup. So consider that. Remember the $10B settlement?

There are also tech companies that do not touch the cannabis in any part of the value chain, such as apps that help you monitor your health or which facilitate reviews and delivery.

Legal Landscape: With a majority of U.S. states legalizing recreational marijuana and an expanding embrace of medical cannabis across the nation in 2023, the cannabis market is gradually shedding regulatory barriers. However, investors are advised to stay vigilant about evolving governmental regulations for compliance.

Mastering the Art of Cannabis Stock Investment:

1. Categorically, cannabis products fall into three segments: medical, recreational, and therapeutic. A thorough understanding of the projected revenue for each category is imperative for informed investment decisions.
2. The universe of cannabis-focused companies is diverse, encompassing biotech firms specializing in cannabis extraction, ancillary service providers, and vertically integrated growers and retailers. Investors must carefully assess each category to tailor their investment strategy.
3. Like any investment, cannabis stocks come with inherent risks, including legal uncertainties, market volatility, potential scams, pricing and taxation fluctuations, tax issues, lack of bank accounts or banks unwilling to support growers and dispensaries, and the dilution of shares. Investors are well-advised to meticulously weigh these risks before making investment decisions.
4. Investors should conduct an exhaustive review of disclosure documents, official reports, and industry news provided by prospective companies. Crucial factors for consideration include the competency of the management team, financial stability, market performance, and competitive positioning. Look out for real IP in the form of patents, research at universities, research done as case studies which can be verified by a third party. Some companies are branding plays and have no IP at all. Snoop or Martha Stewart, for instance. These investments may be risky if a brand depends on the whim of a personality like Kanye West and his endorsements of Adidas.
5. Pump and dump. Cannabis stocks in Canada and the US may be built on an existing company such as penny stocks. Investing in a penny stock might be risky if the cannabis company is operating on a pump and dump scheme. Pump and dump scams are a type of fraud where the criminals artificially inflate the price of a company’s stock through false and misleading statements and actions in order to sell their own cheaply purchased stock at a much higher price. See SEC risks here for medical marijuana specifically.

Strategically Positioning Your Cannabis Portfolio:

Investors seeking exposure to cannabis stocks can explore platforms that facilitate access to reputable companies. Creating a well-informed, diversified portfolio in this rapidly evolving sector requires due diligence and strategic decision-making. Investing in a cannabis company is no different than any other.

Does it have a great CEO?

Does it have its unique edge in the market?

How does it treat its employees?

What are its reserves?

Does it have a sustainability plan and outlook?

Is it a B Corp?

Ask the same question you would in any other investment.

Frequently Asked Questions about CBD and THC companies:

1. Evaluating CBD Stocks: The viability of CBD stocks as a portfolio diversification tool hinges on various factors, including regulatory shifts and the financial performance of individual companies. Investors are urged to assess the legal landscape and consumer demand for cannabidiol. Companies in the US operating at CBD medical companies are usually using the CBD for branding because THC can still put them into legal troubles, even have search engines like Google remove their company from search results, it’s that uncertain. Positioning as a CBD company may be just a ruse. If they truly are a CBD company ook under the hood to be sure of what’s in their pipeline. CBD as a nutraceutical product has been considered by companies such as Coke.
2. Dividends in Cannabis Stocks: Cannabis companies typically prioritize investment for expansion and research over dividend payouts, especially in their early growth phases. The cannabis market is still young providing amazing opportunities to gain along with painful risks.
3. Assessing the Cannabis Market: While the cannabis market presents lucrative opportunities, the potential impact of regulatory uncertainties on industry growth necessitates thorough research and risk assessment before entering this dynamic market. This is especially true in the US. Cannabis is legal in Canada recreationally but Health Canada is harder to crack than the FDA if you are looking for regulatory advice. Canada’s medical doctors are flocking to medical cannabis which may explain the doctor shortage there.
4. Anticipated to surpass $100 billion USD by 2030, or as little as $444 billion, the cannabis industry is just starting and poised for significant growth, making it an attractive prospect for investors compared to the estimated $51.27 billion in revenue in 2023.

Leading cannabis stocks on the NASDAQ

Canopy Growth (NASDAQ:CDG) has been expressing interest in the US market over an extended period. Back in 2019, the company revealed plans to acquire Acreage Holdings, a multi-state operator (MSO). However, the deal has yet to be finalized. In response, Canopy Growth recently introduced a special purpose vehicle, Canopy USA, to manage its US-based investments. Unfortunately, the Nasdaq has raised objections to this strategy. While Canopy Growth may consolidate its investments in various UScompanies, such as Wana and Acreage, these entities must technically remain distinct. Consequently, Canopy Growth cannot integrate their results into its own, and the company’s growth is still heavily dependent on the legalization of marijuana in the US.

Tilray Brands (NASADQ:TLRY) finds itself in a comparable situation after acquiring the senior convertible notes of MSO MedMen Enterprises. The expectation is that the two companies will eventually merge when it becomes permissible to do so. However, Tilray is not idly waiting for this to happen. The company has been actively diversifying its portfolio by entering the alcohol industry. In August, Tilray announced the acquisition of eight brands from Anheuser-Busch InBev, positioning itself as one of the largest craft brewers in the U.S. market. This strategic move not only broadens its business scope but also allows Tilray to expand its operations in the U.S. without solely relying on the marijuana sector.

SNDL (NASADQ: SNDL) has been pursuing expansion through acquisitions in recent years, with a primary focus on the Canadian market. In 2021, the company acquired Inner Spirit Holdings, a cannabis retailer, making SNDL one of the largest operators of pot shops in Canada. A year later, SNDL expanded its reach by acquiring Alcanna, an alcohol retailer with a majority stake in cannabis retailer Nova Cannabis. In January, SNDL further announced the acquisition of Valens, a cannabis extraction company. Acquisitions have played a pivotal role in SNDL’s remarkable growth, evident in the reported net sales of 712.2 million Canadian dollars ($525 million) last year, reflecting an astonishing 1,170% increase from the previous year.

An overview of cannabis stocks to consider. This isn’t a full list (and it never will because of the reasons we mentioned above) and includes only marijuana stocks with market caps of at least $200 million.

Have a cannabis company or idea to share? Drop us a line: contact@greenprophet.com

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Cannabis is still illegal under federal law in the United States. But many states have already embraced its advantages. In recent years, cannabis-use legalization policies have sped up along with the uptrend in the number of users. Statistics show that about four million Americans use cannabis. And we can guess those numbers are probably a lot higher especially when it comes to recreational use. Indeed, it has overcome prejudices to become one of the most popular therapeutic options. 

The global cannabis market is growing and sprawling like a weed (no pun intended). It may expand by a compound annual growth rate (CAGR) of 24.3 percent, reaching $82.3 billion by 2027. With its growth prospects, investors and businesses are optimistic about its future trends. It’s no wonder they’re geared toward cannabis stock investing. 

As an entrepreneur, you may seize this opportunity to grow your cash reserves. If you’re also interested, carrying out these steps are vital. 

Reassess Your Financial Capacity 

Sure, you want to generate more returns and raise your capital. It may help you expand your operating capacity, Yet, you must sustain your operations and cover payables. 

Answer these questions. Will there be enough cash left after reinvesting a portion of it? Do I have to borrow to ensure adequate capacity? If the answer is a yes and a no, think twice before proceeding with your plan. Investing in a risky business, means you will need to be okay with losing it all.

Market volatility stays overwhelming even after the recent inflation lull. Interest rates continue to skyrocket, making borrowing costs burdensome. While investing can be promising, liquidity should always be your top priority. 

Identify the Types of Cannabis Products 

Due to different views among the states, the reason for the legalization of cannabis varies with its uses. Cannabis is processed either as a medical or recreational product. You will hear words like CBD and THC.

Medical cannabis is legal in 36 US States, three territories, and the District of Columbia. Additionally, over forty countries authorize its medicinal uses. It’s often used to relieve anxiety, depression, stress, and even epilepsy. Even so, one must secure a prescription from a qualified healthcare provider before obtaining it. 

Meanwhile, recreational cannabis for adults is legal in 18 US states. It’s also legal in other countries, such as Canada, Mexico, and South Africa. 

Identify Cannabis Sources 

There are three primary sources of cannabis. 

• Cannabis Growers and Distributors 

They cultivate and propagate cannabis in their facilities, harvest the crops, process them, and distribute them to the market. You might also see this industry as agriculture.

• Cannabis Biotech Companies 

These companies may join the cannabis industry to extract cannabinoids and develop prescription drugs. They are often headed by a medical doctor and people with PhDs.

• Ancillary Providers

They neither distribute nor develop new products from cannabis. But, they support the cannabis industry with their products and services. These may include lighting systems, hydroponics, and packaging materials. 

Determine Different Cannabis Perceptions 

Before investing in cannabis stocks, remember that the industry faces various risks and above those special risks, investing in startups and new companies is always risky. Legal and political threats are evident, limiting the capacity to produce, distribute, and expand. 

Supply and demand inequality may also be challenging since cannabis can’t be cultivated in other states due to soil quality. Also, some areas have excessive demand, outpacing supply, and vice versa. Other risks include over-the-counter and financial constraints. 

Despite this, the cannabis industry has more enticing growth prospects today. The increased awareness of its medicinal uses backs its appeal to the public. Amid legal and political restrictions, many states have decriminalized it. 

Its market size is expanding in states where medical and recreational products derived from cannabis are legal. It draws more demand as cigarette, e-cigarette, and vape businesses become open to exploring cannabis for their market, particularly cannabidiol (CBD). 

Meet With Business Experts 

Before you venture into cannabis investing or mergers, you must consider many factors. You must understand that cannabis skepticism remains prevalent across many regions. 

Will it derive more insightful business strategies? Will it affect the legality of your business? How will the market perceive your business? Think about these things a hundred times to avoid potential business problems. 

If you and your team are still confused, it may be time to seek assistance from business experts. They are willing to devote their time and share helpful business ideas. From business filings and maintenance to expansion, they will always back you up. They will extend all the help you need for your business plans. 

Assess Cannabis Companies 

After weighing the risks and opportunities in the industry, look for outstanding cannabis companies. Check their financial statements to determine their performance. In the income statement, you can assess the efficiency of the company. For cannabis growers, you must find the cost-per-gram of cannabis production, excluding depreciation, amortization, inventory adjustments, and the like. 

It’s also important to check the cash level relative to its borrowings to know if it can cover repayments. The percentage of cash to current assets will tell you about its liquidity. Other key financial indicators include the Net Debt/EBITDA Ratio, Quick Ratio, Asset Turnover Ratio, Return on Equity, and Debt/Equity Ratio. 

Aside from the financial statements, you must observe growth strategies and market positioning. These include mergers, pricing comparisons, and market share. Dividend payments are a plus, especially for publicly-traded businesses. 

Once you find the optimal choice, evaluate the stock. Is it reasonable relative to its financial health and dividends? You can use the Price-to-Earnings (PE) Ratio, Price-to-Book Value (PB) Ratio, Discounted Cash Flow Model, Enterprise Value/EBITDA Ratio, and Dividend Discount Model. You can use these ratios even for companies not open to stock trading. After all, it’s your investment you want to assess. 

But for public companies, watch the price trend closely. Market perceptions and changes may influence the stock price. Technical traders are particular about stock price patterns. These can be helpful when the stock price moves sideways without a clear indication of reversals. You may also use moving averages to determine the stock price direction. Doing so can help you find an excellent entry point to make a position. A practice called pump and dump is notorious in cannabis stocks. Ask around and make sure the company really does have technology, clients, a business. 

Lastly, check if the company complies with the ESG reporting. It is difficult to match cannabis with ESG compliance. But businesses are expected to be more responsible with their production. 

Invest in Cannabis Stocks and Observe Market Dynamics 

If the company satisfies the conditions, it’s time to invest. But that is just the beginning of your trading journey. You must update yourself on company press releases, financial results, and market changes. It can help you decide to buy more stocks, hold them for the time being, or sell them. Hence, you can avert stock losses or generate gains. 

The cannabis industry is a risky but enticing industry to watch out for. It expands with realistic growth prospects despite the challenges. Stock prices are still down, showing an opportunity for an entry point. Yet, you must be careful as economic uncertainties blow the stock market. 

The post A Complete Guide to Cannabis Business Investing appeared first on Green Prophet.

Seedo Corp “Seedo” (OTCQB: SEDO), a high-tech start-up providing the world’s first fully automated and controlled indoor growing machine for the cannabis and agriculture markets, announces $4 million capital raise at a price of $2.75 per share.

The raising was spearheaded by SodaStream CEO Daniel Birnbaum, who recently joined the Company’s Board of Directors and is reinvesting in less than one month since his initial investment.

“We are proud to have created a precedent in attracting institutional investor, and would like to thank Daniel Birnbaum for his renewed expression of faith,” said Zohar Levy, CEO and Director of Seedo. “We are currently creating a strategic mix of investors for the company, including recognized Nasdaq investors, Family office and Wall Street leaders that previously invested in SodaStream.”

Seedo, which specializes in the development of automated cannabis growth technologies, is listed in OTC in the United States. The Company recently announced an agreement it signed with Kibbutz Dan for the establishment of an automated containerized growth farm for medical cannabis in Israel.

The project is expected to produce 14 tons of dry cannabis bud valued at NIS 86 million. The advanced systems used for controlled growth results in quality, uniform, product that is free of bacteria and mold that currently plagues greenhouses.

Seedo Corp. focuses on the development and distribution of home growing automated machines for various herbs and vegetables worldwide. It also develops herbs and vegetables commercial container. The company was founded in 2015 and is based in Yokneam Illit, Israel.

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