Marijuana Industry Growth Resembles the Dot Com Boom

Marijuana legalization has been a hot topic for the last decade. Pent up demand is being released as more states and nations rush to cash in on legalization. It has spread to so many states, that the industry is growing rapidly. Publicly traded corporations are sprouting everywhere. Bold investors have started the process of identifying the companies with the best foundations for growth.

Many stocks have seen such fast growth that it brings to mind the dot com boom of the late 90’s. Tech firms capitalized on rapidly expanding markets. Those who found the companies with real business models walked away with fortunes. The perfect storm of rapid legalization of the industry has attracted big investor’s attention. However, they often have to move slowly due to their size. Smaller fast movers may end up getting in sooner while companies are still undervalued. This of course can lead to much bigger returns.

One fast growing company is Canopy Growth Group (CGC), which has just raised a whopping $4 billion dollars from investors. That is essentially the equivalent of seeing a company such as Google or Amazon when they first went public. The industry is buzzing with many people looking to duplicate that for themselves. The stock has since soared from about $24 in May, to its price of  $41.59 according to NASDAQ. [https://www.nasdaq.com/symbol/cgc]

Another publicly traded company is named Player’s Network Inc. (PNTV). The firm is based in Nevada and California. It focuses on the seed-to-sale segment of the cannabis industry. Seed-toSale refers to everything from growing the plant to selling it in licensed dispensaries. With two massive facilities in two very strong markets, Player’s Network expects to turn its first profit by the end of 2018.

PNTV recently purchased a 56,000 square foot facility that is estimated to generate an annual revenue of $11 million. After a reported 2474% increase in revenue, the firm has targeted an increase from 5 cents a share to 20 cents. Player’s Network aims to achieve this by scaling upon its foundations into about 17 other states. Markets such as Arizona, Florida, Hawaii and New York are among the biggest in the United States. It may soon be among the biggest in the business.

One more of the stocks to look at is Aurora Cannabis (ACBFF) which is another Canadian company. It is licensed and is listed on the Toronto Stock Exchange. It sells things such as oils, vaporizers and the plant itself. It has a market cap of over $5.8 billion according to Yahoo[https://finance.yahoo.com/quote/ACBFF/] While it appears to be a bit more volatile, the stock is still about 4 times higher than it was at the beginning of this year.

The last opportunity to study is known as Cronos Group (CRON). It is based in Canada and has recently had a large spike in share prices. Cronos group is the very first of its kind to be licensed to trade on the NASDAQ. United States citizens finally have the chance to legally invest in the industry. This is because the company is legally operating in Canada and therefore doesn’t run into problems for investors. Such news has already gotten the firm massive returns, and now investors will be looking to duplicate these results elsewhere.

Institutional investors also have responded favorably to the new recreational supply agreement reached with the Ontario Cannabis Store. This is according to an article published by a popular investment site called The Motley Fool[https://www.fool.com/investing/2018/08/21/why-cronos-group-inc-stock-jumped-again-today.aspx]. The “store” is not an ordinary store, it is the sole licensed retailer for all of Ontario’s recreational Marijuana. Ontario is Canada’s most populated province and is therefore a huge market with room to grow.

Many are beginning to believe the industry is still undervalued. One by one states have marched to legalize. Entire countries such as Canada have broken ground by legally regulating the industry. Countless firms are being snapped up by larger organizations. It may not be long until the big money in finance seizes the opportunity and pounces. When that happens it will may mint fortunes for the few who took calculated risks and got in early. Of course many companies in silicon valley didn’t make it. However, some such as Google, Oracle and many others had clear strategies and footing for massive growth. Investors who passed on the huge gains of the dot com boom may remember a similar situation.

To be entirely upfront, the legal Marijuana industry is still in its early stages. With such high potential returns, it comes with risk as well.  It is important to note the companies with real fundamentals that can be built upon. Investors are advised to do their due diligence. They can do so by consulting legal and investment advisers and doing deep research. After careful consideration, one may find quite a few companies worth a look at.