How to Invest in Cannabis Stocks in 2024

Carolina Caro Mora
12 Min read

Cannabis legalization in some areas and countries has piqued the interest of markets, making cannabis investment an option to consider. This can be accomplished in two ways: by purchasing shares in companies related to the sector or by speculating on its price via Contracts for Difference (CFDs). 

Investing In Cannabis Stocks: An Introduction

Cannabis is a plant that has had a very bad reputation for many years; however, in recent years, the situation appears to have begun to change, and some countries have legalized it, either fully or only for medicinal purposes, which has sparked some interest among financial market investors. 

Investing in Cannabis means investing in companies that produce, distribute or focus on technology related to marijuana plants.

To invest in cannabis companies, you must first open an account with a broker that allows you to buy shares in such companies.

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Meet The Medical Cannabis Industry

Cannabis production, consumption, and possession are still illegal in many parts of the world. 

However, a growing number of countries are changing their minds about the plant and taking a more pragmatic approach, recognizing the medicinal benefits that can be obtained from its use. 

These countries include Canada, Mexico, Uruguay, and South Africa

Other countries have only lifted these restrictions on a state or regional level. The United States is one of them, with medicinal use permitted in 36 states and recreational use permitted in 19 states, including California, Washington, and New York. 

The legalization of cannabis use is a hot topic in a number of countries, including the United States, New Zealand, and even neighboring countries like Italy, but legal risk is one of the inherent risks associated with cannabis investment. 

However, one of the inherent risks of investing in cannabis is legal risk. How much money does cannabis move globally?

Prepared by author based on Statista data. Sales forecast of recreational cannabis sales in the United States in USD millions. 

According to these projections, the recreational cannabis sector in the United States alone could more than double in less than five years, which is one of the reasons to invest in cannabis. 

These are only estimates, and they may change in the coming years, both upwards and downwards. However, recreational cannabis use in the United States increased by more than 70% in 2020, with sales totaling USD 18.3 billion. On the other hand, they only include cannabis consumption, which would be the final link in the production chain, despite the fact that there are a large number of companies at intermediate levels.

Cannabis Industry 

The cannabis industry consists primarily of three types of production activities: 

Producers  These are cannabis manufacturing companies. These businesses will be impacted by traditional agricultural production factors such as weather conditions or rising agricultural raw material costs. They are the chain's first link. 
Biotechnology  Companies devoted to the advancement of cannabis-related technology. This category is dominated primarily by pharmaceutical laboratories using cannabis for medicinal purposes, particularly those associated with cancer, arthritis and insomnia treatments. 
Distributers  They are the chain's final link. Companies in charge of transforming raw materials, processing them, and distributing them via sales outlets or affiliates. 

Before investing in cannabis, consider the characteristics of the production activity in which the chosen company or companies are involved. 

Although past performance does not guarantee future performance, it has been demonstrated that economic cycle variations have a greater impact on cyclical companies, such as distributors, than on non-cyclical companies, such as pharmaceutical laboratories.

Cannabis Stocks: Companies with Stock Exchange Listings

In the following sections, we'll look at how much a cannabis share is worth. Among the top companies to invest in marijuana on the stock market by market capitalization are:

Aurora Cannabis Inc. Shares (ACB)

What exactly does Aurora Cannabis do? Aurora Cannabis Inc. is a Canadian company based in Edmonton that was founded in 2006. The company is dedicated to cannabis cultivation and distribution. Its eight manufacturing plants serve more than 25 different markets. 

It sells its goods under ten different brand names. Four of them are for medical purposes (CanniMed, MedReleaf, Aurora, and WMMC) and six are for recreational purposes (San Rafael, Daily Special, Aurora Drift, Whistler, Altavie and Woodstock). 

Canopy Growth Corp (CGC

Is a Canadian company based in Ontario. The company is the result of the 2013 merger of Tweed Marijuana Inc. and Bedrocan Canada. In 2016, the company was described by the Financial Post as "Canada's first cannabis unicorn" by having a market capitalisation in excess of $1 billion.

The company is dedicated to the production and distribution of marijuana for both medicinal and recreational purposes. In Spain, the company entered into a collaboration agreement with the pharmaceutical company Alcaliber S.A.

Tilray (TLRY)

Is a Canadian company based in Ontario that is involved in the production and distribution of cannabis for medicinal purposes. 

 It was the first Canadian company to export medical cannabis to the United States for clinical trials. In 2018, Tilray agreed to sell, distribute, and co-brand its non-smokable/non-fuel medical cannabis products in legal markets around the world with Sandoz, a subsidiary of the Novartis group. 

Aphria and the company recently announced a merger agreement. It will, however, continue to trade under the Tilray brand and use the Tilray ticker symbol on the NASDAQ and the Toronto Stock Exchange. 

Tilray is the most focused on investing in medical cannabis of the companies mentioned in this article.

Associated British Foods (ABF)

Is a multinational British food processing and retailing corporation headquartered in London, England. 

It is the world's second largest producer of baker's sugar and yeast, as well as a major producer of other ingredients such as emulsifiers, enzymes, and lactose. 

In recent years, the company has made significant investments in marijuana cultivation and sale, replacing the 18 hectares (equivalent to 13 football fields) of its high-quality Riverside Glasshouse tomato-growing facility with marijuana cultivation for medicinal purposes. Furthermore, the agreement with the pharmaceutical company GW Pharmaceuticals (GW) as a cannabis supplier stands out. 

Cronos Group (CRON)

Cronos Group is a Canadian-focused company that produces and distributes cannabis on five continents while utilizing cutting-edge technology. 

Cronos Group's brands include Peace Naturals, Cove, Spinach, Lord Jones, Happy Dance, and Peace. 

Its global presence and use of disruptive technology in the field of intellectual property research of cannabis products distinguishes this company from those mentioned above. 

Which cannabis company is the best to invest in? It is determined by your objectives and specific interests. 

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Aurora Cannabis Stock Technical Analysis 

The following is a technical analysis of an investment in Aurora Cannabis, which is part of the Admirals Invest portfolio. 

Source: Admirals MetaTrader 5, ACB, weekly - Data range: 19 November 2017 to 18 May 2023, performed on 18 September 2023. Please note that past performance is not a reliable indicator of future results.

 

The graph above depicts the price of Aurora Cannabis over the last six years. 

The image above shows the evolution of the Aurora Cannabis share price over the last 5 years.

The graph highlights the strong rise in the price of Aurora Cannabis shares at the end of 2017, when they had a marked bullish rally and in less than two months the price soared by more than 400%, from USD 28 per share to beginning of November 2017 to exceed USD 140 as of December 31, 2017.

However, after this strong boom, some traders proceeded to collect profits, and in the following months bearish cycles formed. This is due to the lack of legislation, which prevents cannabis companies from obtaining financing.

As a result, the price has been declining, remaining around $1 for the last year.

At the moment, there is no rebound in price, however, in the long term Aurora Cannabis could present itself as a cheap stock with options to experience a potential rise, especially if it designs a national law in the US.

Invest in Cannabis: How to Start?

Admirals allows you to invest in cannabis online through your Dashboard. Investing in companies like Aurora Cannabis through Admirals' Invest.MT5 account. Simply follow these easy steps: 

  1. Log in to your MetaTrader 5 trading platform account. 
  2. Click the right mouse button on the Market Watch tab. 
  3. In the resulting menu, select Symbols and enter Aurora Cannabis or #ACB in the search bar. 
  4. Select the ticker from the list below, then click Show Symbol and OK. 
  5. The desired symbol will appear in the Market Watch menu list; drag it onto the chart.

To begin trading, simply follow these steps! 

It is also possible to trade cannabis stocks of marijuana companies, such as those listed above in this article, using Contracts For Difference (CFDs), and you can trade cannabis CFDs, speculating both up and down on the price of their shares, using Admirals Trade accounts. 

CFDs are sophisticated leveraged products that carry a higher level of risk and are not suitable for all investors. But if you wish to discover the latest trading trends, get actionable strategies and enjoy complimentary tools., feel free to tune into our live webinars hosted by our trading experts:

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FAQ

What are cannabis stocks?

Cannabis stocks are shares of companies involved in the cannabis industry. These companies can be engaged in various aspects of the cannabis business, including cultivation, production, distribution, and retail of cannabis products. With the legalization and decriminalization of cannabis in several jurisdictions, investing in cannabis stocks has gained popularity as a way to participate in the potential growth of the industry.

What factors should I consider when investing in cannabis stocks?

When investing in cannabis stocks, it's important to consider several factors. First, evaluate the regulatory environment in the region where the company operates, as regulations can significantly impact the industry's growth and profitability. Additionally, analyze the company's financial health, management team, competitive positioning, and product portfolio. It's also crucial to monitor the overall market trends, consumer demand, and potential legalization developments that can impact the industry as a whole.

What are the risks associated with investing in cannabis stocks?

Investing in cannabis stocks carries certain risks. One of the primary risks is the regulatory uncertainty surrounding the cannabis industry, as laws and regulations can change rapidly, affecting the company's operations and profitability. Furthermore, the cannabis market can be volatile, leading to price fluctuations in stock values. The industry also faces competition, both from established players and new entrants, which can impact market share and profitability.

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INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets investment firms operating under the Admiral Markets and Admirals trademarks (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following:
1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst (hereinafter “Author”) based on the NAME +(Position) personal estimations.
5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
6. Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.

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