If marijuana legalization goes national, which may happen in 10-15 years, estimates on sales could range from $10 billion to over $100 billion annually.
Since there are few large cap plays on the sector, info on publicly-traded marijuana firms, mostly traded in the OTC market, has been a bit harder to come by.
Since we've been talking about marijuana legalization and cannabis stocks on Twitter and StockTwits (not the "royal we", but a group of us on the stream) quite a bit lately, I thought it'd be useful to put together a convenient list of publicly-traded cannabis plays here.
Disclaimer note: I've added some thoughts on microcap "penny stocks" and OTC market risks in the paragraphs below. Please read these comments fully and manage your risk. It's your money, after all.
List of marijuana and cannabis-related stocks (click ticker for share price and company info):
AERO ATTBF AVTC BRDT CANN CANV CARA CBDS CBGI CBIS DIGX DIRV EAPH EDXC ENDO ENRT ERBB FITX FSPM GRNH GWPH HEMP HSCC MCIG
MDBX MJNA MNTR MWIP MYEC MYRY NTRR NVLX PHOT PLPL REFG REVO
RFMK SKTO SPLI STEV TRTC UTRM VAPE VAPR WNTR ZDPY.
See also: the Marijuana Index, Dan Mirkin's 420 Index, and the Pot Stocks company list (updated forum thread).
Due to the fact that most of these companies trade in the OTC market, I want to point out that many of these companies have reporting standards that differ from listed companies on the Nasdaq and NYSE. You should not trade these stocks if you do not understand the unique risks in this market.
Many of the stocks attached to hot themes or sectors are just fly-by-night companies with no real revenue stream, issuing press releases to entice "investors" or speculators to buy. Some stocks get halted by the SEC when there is a suspicion of manipulation or fraud.
While there are some real companies with real businesses (and a few OTC names do go on to be listed on the US exchanges), there are also a lot of quick boom and bust (or "pump and dump") plays. Some of these stocks may quickly go back to sub-penny prices.
This is also a "battleground" theme, as marijuana legalization efforts move along in fits and starts. If progress is hampered, or doesn't happen quickly enough, you might see a quick declines throughout sector. A lot of these microcap weed stocks have run up 300% - 500% or more in recent months, so their recent pullbacks may have farther to go.
See the tweets below for more on this...
OTC stocks are mostly "dollar and a dream" turf. Gold miners become rare earth plays overnight, oil & gas firms become marijuana plays, etc.
— David Shvartsman (@FinanceTrends) March 17, 2014 FYI: I've recently traded some smaller positions in OTC cannabis stocks, but won't tweet trades here. Too close to pump & dump territory.
— David Shvartsman (@FinanceTrends) March 17, 2014
I have traded some of these cannabis shares in recent weeks, but have no positions in any of the companies mentioned above at the present time. Everything in this post is strictly an educational reference, so please use this stock list as a jumping off point for your research.
Lastly, I'd like to point out that I'm excited about the emerging cannabis industry and I hope some of these companies achieve real growth and success. I could have spent the last few years betting against this legalization trend and investing in something like for-profit prisons, but that would not have made me a happy person.
To profit, even greatly, from something as disastrous and destructive to human beings as the "War on Drugs" would be a hollow endeavor. I'd rather go long some cannabis stocks and invest in personal freedom, choice, and innovation in cannabinoid medicines. Here's to the "green rush" and a freer, healthier America!
"The illegality of cannabis is outrageous, an impediment to full utilization of a drug which helps produce the serenity and insight, sensitivity and fellowship so desperately needed in this increasingly mad and dangerous world" - Carl Sagan.
Related posts:
1. Sen. Rand Paul's testimony against the Drug War.
2. Prohibition's rise and fall: EconTalk interview with Daniel Okrent.
