- Cannabis investors focus on direct operators extensively and may not be aware of ancillary companies.
- I discuss six that trade on the NYSE or NASDAQ.
- Performance has been good but could get better.
When I first began following the cannabis industry in early 2013, every single stock traded exclusively over-the-counter (“OTC”). Many of them didn’t even file with the SEC! Fortunately, the market has evolved, and today most cannabis stocks trade on junior and senior exchanges in Canada as well as major exchanges in the U.S.
Those wishing to invest in companies that grow, process or sell cannabis but that are unwilling to invest in Canada or on the OTC face a very narrow universe, as major exchanges currently don’t permit direct federally illegal cannabis companies to list. What this means is that those who want to buy a cannabis producer on the NYSE or NASDAQ are limited to Canadian licensed producers. This includes companies like Aphria (OTC:APHA), Aurora Cannabis (OTC:ACB), Canopy Growth (OTC:CGC), Cronos Group (OTC:CRON) and Tilray (TLRY), which each has a market cap in excess of US$1 billion. In total, the NYSE and NASDAQ have 10 companies listed that are direct cannabis producers.
While many may not be aware, there are a few companies that are leveraged to the American state-legal cannabis sector, providing ancillary goods or services, that trade on higher exchanges. These stocks have performed well in 2020, but I believe that they could continue to outpace the broad market as more investors become aware of them.
Published: July 07, 2020
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