Cannabis Stocks on the Rise

2 years ago   •   2 min read

By Juana Know Staff

As the cannabis industry continues to expand at a rapid rate, Wall Street is starting to take notice of the bigger players in the field. Most cannabis companies currently listed on the NYSE or NASDAQ are Canadian. This is likely because cannabis is still illegal at the federal level in the U.S. Canada, however, legalized cannabis nationwide in October 2018.

Here are three companies worth watching in the cannabis industry.

Akerna

This company doesn’t grow cannabis or even process it. Rather, they sell a software platform called MJ Freeway that is a seed-to-sale tracking solution for local/state governments and licensed pot producers. One of the biggest compliance challenges dispensaries, grow operations, and processing plants face is tracking the product. They also sell enterprise-level software to cultivators, dispensaries, and manufacturers.

It’s an American company that only sells software solutions. It endured a very lengthy review process before receiving approval to be listed on the NASDAQ Capital Market. This market specializes in smaller companies and has fewer requirements.

With more states legalizing medical and recreational marijuana, Akerna is well-positioned for long term growth. Some states have even made Akerna a legal requirement for businesses.

Scotts Miracle-Gro

This brand has been synonymous with home gardening for decades. But Scotts is counting on the booming cannabis industry to boost its bottom line. They did this by acquiring Hawthorne Gardening Co, the largest distributor of hydroponic products. Like Akerna, Scotts Miracle-Gro is a U.S. based company.

Aurora Cannabis

This company is one of the largest cannabis producers in the world, producing around 62,000 kilograms annually, with growing facilities in Canada and Denmark.

Aside from growing cannabis, Aurora also invests in other areas of the cannabis industry. This allows for a vertically-integrated business that can leverage their growing operations with manufacturers and retailers, resulting in a more efficient and cost-effective operation.

Investing In Cannabis

While investing in cannabis in the U.S. is still limited, investment opportunities abound in Canada. If you’re thinking of investing, here are a few items to keep in mind:

Is the company involved in more than one area of the cannabis industry? Companies that own dispensaries, manufacturing plants, and grow operations are  likely to see long-term growth.

Does the company have interests outside of cannabis? Scotts Miracle-Gro is a great example of a company that's pretty well-diversified. Their traditional consumer gardening products will keep the company on a steady course, regardless of what happens in the cannabis industry.

Don’t forget ancillary cannabis businesses. Businesses that support the cannabis industry can also make great investments. These businesses  may carry less risk. Further, ancillary businesses can focus on a wide variety of products and services, from packaging to marketing agencies.

Before investing in this nascent industry, do your research.

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