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The Marijuana Industry: The Specifics Of Investing In Two Of The Major Stocks

|Includes: Americann Inc. (ACAN), ACB

Summary

The marijuana industry is the next big thing since the television and broadband internet industry's.

AmeriCann, Inc. is expanding and they aren't slowing down.

Aurora Cannabis Inc. is one of Canada's #1 cannabis stocks.

The benefits of investing out weight the risks and its worth getting involved.

THE INDUSTRY AND WHY YOU SHOULD BE INVOLVED:

What do you know about the Marijuana Industry? If you are in your 20's to mid 40's, I bet your knowledge and your opinion varies greatly from your parents and/or grandparents. Marijuana has slowly transformed from "just another drug" into something that could potentially save a life. It is becoming a medical go-to.

In 2016, North American marijuana sales grew by an unprecedented 30%, to about $6.7 billion, because of the continuous legalization's in both United States states and in Canada's Provinces. The market has a projection of over $20.2 billion by 2021 assuming a compound annual growth rate of 25%. This report done by Arcview Market Research and analyzed by Forbes recognizes the steps being taken in Canada to legalize marijuana for adult use.

Tom Adams, Arcview's editor-in-chief, stated that "the only other consumer industry categories I've seen reach $5 billion in annual spending and then post anything like a 25% compound annual growth in the next five years, are cable television (19%) in the 1990's and the broadband internet (29%) in the 2000's." He stated that 21% of the total United States population now live in legal adult us markets while investment dollars are pouring into California, Florida, Massachusetts and Nevada. Another staggering statistic suggests that this industry is nothing to pass up. Colorado, Washington and Oregon saw their sales jump almost 62% in just one year (September 2015- September 2016). 

Troy Dayton, Chief Executive Officer of Arcview, believes that the cannabis industry is an extremely unique opportunity for those looking for somewhere to invest. The marijuana industry has a eye catching compound annual growth rate and it isn't yet flooded with multi-national companies and institutional investors. The birth of a multi-billion dollar industry like this is rarely discovered and if you are educated enough to take part, you don't want to miss out. 

THE MAJOR PLAYERS:

With an industry exploding like this one there are an insane amount of companies to look into, but which ones are the most important? The two that I believe carry the most weight in the industry are AmeriCann, Inc. (OTCQB:ACAN) and Aurora Cannabis Inc. (ACBFF). I believe this because Aurora Cannabis Inc. (ACBFF) is the number one licensed medical distributor in Canada and AmeriCann, Inc. (OTCQB:ACAN) serves a worldwide market and is a national leader of sustainable cultivation and processing infrastructure for the medical marijuana industry. 

Other major players to keep in mind are:

  •  Aphria Inc. (APHQF)
  • Blue Line Protection Group, Inc. (OTCPK:BLPG)
    • This group provides consulting, armed security, compliance and investigations, transportation and secure vaulting services to banks, businesses and government entities who need to protect their assets, licenses and clients in the cannabis industry. Their website is: Blue Line Protection Group
  • American Green, Inc. (OTCPK:ERBB)
    • American Green, Inc. is second oldest publicly-traded cannabis company in America, with over 55,000 certified shareholders. Their website is: American Green
  • Endexx Corp. (OTCPK:EDXC)
    • Endexx Corporation is a micro-cap publicly traded company, representing the interest of its shareholders and collaborating with independent companies to build businesses that can thrive collectively in the equity markets. Their website is: http://www.endexx.com

AMERICANN, INC. (OTCQB:ACAN):

AmeriCann, Inc. (OTCQB:ACAN) is an Agricultural Technology company that is publicly traded. The company is a national leader for the medical marijuana industry with its amazing infrastructure that allows them to create a sustainable way of cultivating and processing the cannabis plant. The AmeriCann company was the first public cannabis Certified B Corp to earn the high accreditation of acknowledgement of the company's commitment to social and environmental responsibility.        

AmeriCann, Inc. (OTCQB:ACAN) is somewhere to consider investing in because the company is growing with the industry. As stated earlier, AmeriCann is a worldwide distributor and recently received a $10 million equity financing commitment which will be used for expansion. The $10 million will be used to construct a new medical cannabis center in Freetown, Massachusetts. This center will be 47 miles away from the quickly emerging medical cannabis market in Boston, Massachusetts. 

The AmeriCann, Inc. (OTCQB:ACAN) stock is risky, but as the industry grows there's no stopping this stock from sky rocketing. At close on February 21, 2018 Yahoo finance reported $2.80 USD. Below is the basic information for the ACAN stock. The stock is risky but small and worth the second look. 

Day's Range (as of Febuary 21st, 2018) 2.75 - 2.85
52 Week Range 1.11 - 5.35
Volume 26,047
Avg. Volume 122,573
Market Cap 53.837M
Beta -4.29
PE Ratio (TTM) N/A
EPS (TTM) -0.19

AURORA CANNABIS INC. (ACBFF):

Aurora Cannabis Inc. (ACBFF) is a wholly-owned subsidiary based in Canada. They are a licensed producer of medical cannabis that it in accordance with Health Canada's Access to Cannabis for MEdical Purposes Regulations. Aurora Cannabis's inventory consists of DMD (Double Milled Decarb capsules), vaporizers and oils. The cultivate their marijuana from gardens located at the bottom of the Canadian Rocky Mountains. 

Aurora Cannabis Inc. (ACBFF) reported a revenue gain of over 200 percent in the second quarter of 2018 in comparison to last year at this time. The number of patients that Aurora cannabis serves also increased while their cost per gram declined. The company is currently working on a deal with Cannimed to absorb the company and add about 20,000 patients to their service list.    

With a beta of 1.46 and a market cap of 4.152B, the Aurora Cannabis Inc. (ACBFF) stock is definitely one to keep an eye on. At close on February 22, 2018 Yahoo Finance reported a 8.46+0.04 (+0.48%) while on February 21, 2018, Yahoo Finance reported a close of $8.42 USD. Below is some basic information about the ACBFF stock. 

Day's Range (as of February 22, 2018) 8.28 - 8.57
52 Week Range 1.40 - 12.30
Volume 827,843
Avg. Volume 4,089,429
Market Cap 4.152B
Beta 1.46
PE Ratio (TTM) 604.29
EPS (TTM) 0.01

WHAT ARE THE BENEFITS OF INVESTING?  

A major benefit to investing in this market now is the idea that it can only expand from here. A vital expansion opportunity that is currently being discussed is the use of recreational marijuana in Canada. This legalization would increase the market immensely for cannabis companies. If the market increases this leads to an increase in jobs, an increase in competition and an increase in the worth of the industry. 

Medical marijuana use has already been legalized in Canada and many states in the United Sates. Currently each province is creating a set of rules and regulations for the sale of recreational marijuana. According to Health Minister Ginette Petitpas Taylor, this is a decision that could be made as soon as July, 2018. This authorization would make Canada the second country to have nationwide legalization next to Uruguay. This shows how globally this industry is growing.

Once Canada legalizes the recreational use of this drug, companies will start to expand to take advantage of the new market. More Canadian companies will become publicly trades companies in NASDAQ along with the expansion of United States companies into Canada.     

WHAT ARE THE RISKS?

With every great reward comes risks. Although the industry is expanding, there is a large amount of uncertainty with the new administration's approach towards the legalization. Some believe that, for the United States, Trump will always only favor the idea of medical marijuana and he will back away from recreational use. This is risking the growth of cannabis in the United States from a business standpoint. 

Another risk that could be taken is the idea of to much competition. As more states and countries begin to legalize more businesses are spouting up. There a chance that if to many businesses are created, the cannabis stocks that have continuously been growing could fall back down to a normal or even below normal rate. 

MY OPINION: 

I believe that the marijuana industry is definitively something to invest in. It is only growing and becoming the next big thing. With 29 states in America already approved for medical marijuana and 87% of Americans in support of medical marijuana, its only a matter of time before cannabis becomes recreational across the states as well. As Tom Adams stated, this is the largest industry to reach a 25% compound annual growth since cable television and broadband internet. The marijuana industry and stocks are nothing to surpass. If you invest now I believe you can expect a high return.   

Now you have all the basic information, so what will you do? 

Sources:

Marijuana Sales Totaled $6.7 Billion In 2016

Yahoo Finance 

AmeriCann, Inc. (OTCQX: ACAN)

Canadian Medical Marijuana Producer | Aurora Cannabis

Canada postpones marijuana legalization

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.