What You Need to Know Before Investing in the Cannabis Industry: An Overview

The cannabis industry has had an incredibly rapid growth this past couple of years. The industry’s accountants and growth analysts are busier than ever. They believe that this branch of industry will not slow down anytime soon. According to recent projections, the global cannabis industry will likely be worth $32 billion by the beginning of 2022. That is why investing in these stocks now might be a good move.

What Does the Cannabis Industry Bring to the Table?

Cannabis and its main components, cannabinoids, have helped millions to alleviate pain, deal with various mental conditions, relieve symptoms of cancer, and similar. On a larger scale, the idea is to use cannabis-based products, instead of alcohol and prescription drugs put on the market by the pharmaceutical industry, for the symptoms mentioned above. Alcohol and pharmaceutical industries have been present for decades, and are worth billions of dollars. However, the relatively new CBD industry is slowly but surely becoming a force to be reckoned with, as it could reach more than $150 billion throughout the next decade.

What Are Some Notable Branches of Cannabusiness?

Cannabis companies are divided into three major types. Each of these branches, combined with the other two, is looking to create a top notch cannabis consumption experience. They are as follows:

• The companies that grow cannabis. This branch is the basis of the entire industry, and it focuses on cultivating high-quality cannabis plants in facilities that are the most suitable for cultivation.

• Biotechnological companies. Their main task is to recognize the importance of cannabis in the treatment of certain physical or mental conditions and to create appropriate prescription drugs accordingly.

• The companies providing associated services or products. Such companies are looking to provide services or products needed for the successful growth and packaging of the plants, as well as logistics and consulting.

Each branch is likely to be cost-effective and profitable in terms of investing once you have approached it the right way. Consulting with the right people, especially the companies’ management and accounting teams, will give you a proper insight into your future investments.

What Is the Next Step?

After gaining insight into the respective branches’ and companies’ endeavors and business success stories, there is more research to be done. Namely, the next step should probably be reviewing what a potential company you want to invest in plans to do in terms of growing and expanding on the global market. If the company’s future looks bright, that will bring you a step closer to a successful investment. Do not cast your net wide, but rather focus on a niche that is yet uncovered and still profitable. Aim for stocks that are specific in terms of target audiences, branding, the novelty of products, etc.

In terms of stock investment, cannabusiness is not that different from any other business. Every prosperous investor keeps in mind the quality of the company’s brand and overall appearance. Most of the time, the brand name itself is what sells. That is why you should ask how your partners plan to become noticeable in an already saturated market. Another key factor is looking for partners who see the same qualities in a company and are looking to grow a business as well. That way, you are minimizing the potential competition, and you are working with strong players instead of competing against them.

Finally, focus on a location-specific business at first, and then try to find ways to conquer the global market. According to future projections, the United States will generate three-quarters of the global cannabis revenue by 2024, so growing on American soil might be a smart move.

Ad – Continue Reading Below

The Big Players in the Cannabis Stock Market

Canada’s cannabis stocks are currently leading in the global market since the country was the first one to entirely legalize the recreational use of the plant, with the United States right on Canada’s tail. The coronavirus had quite an impact on many cannabis companies and brought about a lot of changes in a short time. Here are some of the best companies to invest in April and during the summer months:

• Aphria Inc (TSX:APHA) (NYSE:APHA) is a Canadian cannabis company. It produces and sells both medical and recreational marijuana. Last year in November, it announced a serious change in the board of directors, which is why we can expect a lot more from this company in the future.

• Aurora Cannabis Inc. (NYSE:ACB) is a Canadian-based producer, distributor, and seller of various cannabis products. Last year, it generated revenue of C$249 million ($176.34 million).

• Innovative Industrial Properties (NYSE:IIPR) is an American company producing medical cannabis. Its headquarters is located in San Diego, but the company has 36 facilities across the US. It focuses on growing, packaging, and distribution of medical cannabis.

• Canopy Growth (NYSE:CGC) is a Canadian-based cannabis company that is considered the biggest and most powerful cannabis company in the world. It has $1.6 billion in cash and investments, which means that the consequences of the coronavirus will not be so detrimental to this company.

Conclusion

Investing in the cannabis industry is tricky, especially now when no one can predict how the COVID-19 situation will turn out. The marijuana stocks 2020 rebound is going to put a spotlight on other players and push into the background those that were supposed to be leading the market. Therefore, this is the time when investors need to be very careful as no one can tell for sure when or if the coronavirus crisis will be over.