Cannabis
The Marijuana Sector: An Overview
Marijuana is legal in more than a dozen countries while others have mixed laws that allow its use for either recreational or medical purposes—or both. Uruguay was the first country to legalize it for recreational purposes. Jamaica decriminalized cannabis in 2015 and the country saw its first medical dispensary open up three years later.
In October 2018, marijuana became legal for recreational and medical use in Canada. As of July 2021, 18 states, two territories and the District of Columbia legalized recreational marijuana. A total of 36 states and three territories legalized medical marijuana
The global marijuana market was estimated to be worth $9.1 billion in 2020 and is expected to grow 26.7% between 2021 and 2028. This growth is expected to be fueled by an increase in demand (thanks to the increasing degree of legalization around the world) along with a rise in the use of medical marijuana.
Growing Demand
Legal marijuana companies are able to leverage one important advantage, which makes them slightly different from those in the tech sector. While tech companies often need to create demand or to educate their consumer base, marijuana startups face no lack of demand—especially in North America.
Investors who once backed tech firms are now funneling capital into the cannabis industry. PayPal co-founder, Peter Thiel's Fund became the first institutional investor to put money into the legal marijuana industry. The fund was the lead investor in Privateer Holding's Series B funding worth $75 million in April 2015. Privateer Holdings has multiple cannabis investments.
Snoop Dogg is another notable investor in the industry. The rapper makes no secret of his affinity for marijuana and is the director of Casa Verde Capital, a venture capital fund that invests in cannabis startups. The company's portfolio includes names like Dutchie, Green Tank, and Cannalysis.
He's not the only celebrity seeing green. Singer Justin Bieber partnered with California-based Palms to release packs of pre-rolled joints called Peaches in October 2021. Martha Stewart launched her own brand of CBD products including wellness gummies and oil drops, after partnering with Canopy Growth. Stewart released the line in September 2020.
Fastest Growing Marijuana stocks
If we have time on our hands, spare cash, and a penchant for risk then perhaps picking your own pot stocks is an option. Many of these stocks have increased in value by over 300% from their low point in 2020 thus, already factoring much of the good news in the market.
Marijuana Startups
Venture funding for marijuana startups seems to be pouring in from all directions. Commonly referred to as potpreneurs, marijuana startup leaders are betting heavily on the potential for increased legalization.
Weedmaps was founded in 2008 and is based in Irvine, California. It expanded and now has offices in New York, Barcelona, Denver, Tucson, and Toronto. Weedmaps was the first marijuana tech and media brand which provides cloud-based software and data solutions to those within the marijuana industry. It also offers an app that connects consumers with dispensaries. The company was acquired by Grow One in 2015.
Leafly allows consumers to rate and review cannabis strains, more like a highly specialized version of Yelp. Created by a trio of former Kelley Blue Book employees, the company started out as a simple side project in 2010. Within a year, it became a full-time enterprise and attracted the interest of Privateer Holdings. The company raised almost $41 million in three rounds of financing.
After the 2011 acquisition by Privateer, Leafly expanded with the aim of becoming a place for all types of marijuana users to find out more about everything related to marijuana, including which types of products are right for them and finding the dispensaries that sell what they need.
The marijuana industry is made up of companies that either support or are engaged in the research, development, distribution and sale of medical and recreational marijuana. Cannabis has begun to gain wider acceptance and has been legalized in a growing number of nations, states, and other jurisdictions for recreational, medicinal and other uses. Some of the biggest companies in the marijuana industry include Canopy Growth Corp. (CGC), Cronos Group Inc. (CRON) and Tilray Inc. (TLRY).
Many big marijuana companies have continued to post sizable net losses as they focus on investing in equipment to speed up revenue growth. Marijuana stocks, as represented by the ETFMG Alternative Harvest ETF (MJ), have slightly outperformed the broader market. MJ has provided a total return of 33.6% over the past 12 months, above the iShares Russell 1000 ETF's total return of 32.2%