The world’s perception of cannabis (or marijuana) has shifted in the last two to three years, with the legalisation of medical marijuana across the globe adding fuel to the race for investing in the cannabis industry. Most if not all companies in the cannabis industry have grown in the past year, but which are the best cannabis stocks to buy in 2021? This guide answers that question.
Where Can I Buy Cannabis Shares?
The best place to buy and trade cannabis stocks is through an online broker. Trading through a broker allows you to get all listed shares under one platform and access your trading account 24/7.
We have looked at the brokers to find the ones with low costs, regulatory approval, and a wide range of cannabis-related stocks to trade.
Overview of the Cannabis Industry
To understand the phenomenal year-on-year growth of the cannabis industry and its associated shares, let’s look at its development. The use of marijuana for medical purposes even in minimal quantities had long been frowned upon. However, in the last decade, the situation has changed. In the United States alone, more than 35 states have legalised the sale of marijuana in some way.
In Canada, the use of marijuana for recreational purposes was legalised in October 2019, setting a precedent for other countries. Although it took Canada over 20 years to get to such a milestone, various European countries are making plans to develop frameworks to guide the use of marijuana for medical and recreational purposes.
The reclassification of cannabis by the United Nations as a less dangerous drug, and its subsequent removal from the list of most dangerous addictive opioids in 2020, will only further accelerate this $20 billion industry. The most recent US presidential elections also resulted in a major victory for the Democratic Party, and Vice president Kamala Harris is a long-time advocate for the decriminalisation of marijuana.
Although the use of cannabis or cannabis-based products remains illegal in most countries, it is completely legal to invest in companies dealing with cannabis. The USA and Canada account for most of the companies involved with medical cannabis and recreational marijuana. Most of these companies are listed in the New York Stock Exchange and the Canadian TSX Venture Exchange for public trading.
What Are the Trading Hours for Cannabis Shares?
Trading hours or sessions refer to the active hours for the exchange of stocks. Since most marijuana companies are based in North America, cannabis shares are actively traded during the NYSE session, 9.30 a.m. to 4 p.m. EST. They are also subject to the NASDAQ pre-market (4-9.30 a.m. EST) and after-hours (4-8 p.m. EST) trading hours. On holidays, the closing time is 1 p.m. EST.
Trading of marijuana stocks, contracts-for-difference (CFDs), and exchange-traded funds (ETFs) online can be done 24 hours a day on weekdays via a broker app or website.
How to Trade and Invest in Cannabis Shares?
Open a Trading Account
Open a trading account with a broker that offers cannabis stocks. Activate your new account by clicking the link sent to your email, and deposit money to the new trading account.
Choose Cannabis Shares
First, decide on whether to invest in cannabis shares or trade CFDs or ETFs. Then look through the broker’s list to find our top-ten stock suggestions or some of your own.
For each stock you’re thinking of buying, you should be able to see additional information and a price chart. When ready, enter your investment amount or stake size (for CFDs) and press the “buy” button.
Top 10 Cannabis Shares to Buy
We’ve selected the best marijuana shares to buy based on their short-term gains and long-term stability (which may be important in an infant industry).
The top 10 cannabis stocks to buy in 2021:
- GW Pharmaceuticals
- Innovative Industrial
- Cronos Group
- ETFMG Alternative Harvest ETF
- Curaleaf Holdings
- Advisor Share
- Canopy Growth
1. GW Pharmaceuticals
Driven by the success of its flagship cannabis-based drug Epidiolex that treats seizures, this biotech company has accreditation from the government to produce marijuana-related drugs, bringing medical cannabis use to the next level.
The success of Epidiolex, which showed relatively fewer side effects compared to alternative drugs, resulted in net sales of $122 million in the fourth quarter of 2020 alone.
The company is in the final stages of getting approval for Sativex, a drug based on cannabis CBD and THC extracts, aimed at treating multiple sclerosis.
GW Pharmaceuticals shares are a must-watch, considering the success of their flagship cannabis-based drug and expectations of more marijuana-friendly policies.
Florida-based Trulieve has 73 local outlets and 5 outlets in other states. The controlled expansion strategy coupled with a concentration on local expansion helps capitalise on this company's economies of scale.
Net sales doubled to over $350 million in the last financial year.
3. Innovative Industries
Innovative Industries are not a cannabis company in the literal sense. This real estate firm provides greenhouses and industrial facilities to cannabis-based firms. It provides a triple net-lease agreement: the tenant pays for maintenance, insurance, and taxes. The result is predictable and consistent profits.
The company has a market value of over $5.1 billion at the time of writing. As marijuana use for both recreational and medical purposes continues to gain a foothold, the expectations for this company are bullish.
4. Cronos Group
Boosted by investment from American tobacco company Altria, Cronos Group shares had a good run between October 2020 and February 2021 before halving in value. Unlike GW Pharmaceuticals, this company focuses on the provision of recreational marijuana and cannabis products.
This is yet another company that does not deal with marijuana in the literal sense. However, as the largest supplier of hydroponic equipment, it has benefited immensely from the special care needed to farm marijuana and increased demand for legal cannabis. As decriminalisation continues, this company could keep reaping the benefits.
Expert Tip on Investing in Marijuana Shares“ The cannabis industry is still in its infancy. Traders should therefore look out for industry news that could drive cannabis-related stocks higher or lower. ”- Alice Wanjiku
Why Invest in Cannabis Shares?
You should consider investing in cannabis shares because this is a new industry still in its infancy, which means that some of the related stocks could see their share prices increase exponentially as the market matures. That said, most marijuana companies have posted net losses in the last year (at the time of writing).
Frequently Asked Questions
Our top pick stock, considering both medical and recreational marijuana, is GW Pharmaceuticals. But things can change, so it’s always important to do your own research rather than relying solely on stock tips.
The legalisation of marijuana around the world is only getting started. The outlook of the industry is bullish, so it could be a good time to invest in marijuana-related stocks.
The strongest marijuana company in financial terms is Curaleaf holdings, which has a market value of $11.4 billion at the time of writing.
You won’t be breaking any drug laws by investing in cannabis-related stocks, but you will have to be eligible to open a trading account with a brokerage.
The best marijuana stock for a beginner investor is the Advisor Share Pure US cannabis ETF because an ETF spreads your risk across a basket of stocks rather than a single stock.
Research on cannabis use continues to reveal its immense medical value and the numerous advantages of its recreational use, cementing its importance in the current world we live in.