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Investing in medical cannabis: opportunity or risk?

Investing in medical cannabis: opportunity or risk?

Investing in medical cannabis: opportunity or risk?

Beyond the risks inherent in investing in any stock product, investing in medical cannabis is becoming one of the most profitable business opportunities today, with great growth prospects in the years to come.

Forecasts for the production and marketing of medical marijuana are becoming increasingly attractive, as more and more countries are legalising medical cannabis cultivation. Countries such as the US, Canada and Uruguay were the first to allow marijuana investment funds and were gradually followed by European countries such as the UK, Germany, Italy and France.

Therefore, as medical cannabis has been gaining ground and its benefits for patients with various pathologies have become evident, investment in medical marijuana has skyrocketed in recent years. It is a market that has had a stock market turnover of more than 80 billion dollars, with more than 200 companies competing in the international market, listed on the world’s largest stock exchanges such as Toronto and New York.

There are specific stock indexes covering the major firms in the sector, such as the North American Medical Marijuana Index, which appreciated 68% from the yearly lows in mid-August. It includes major firms in the sector such as Canopy Growth with a turnover of 9.6 billion euros. Aurora Cannabis with 7.3 billion, Gw Pharmaceuticals, 4.2 billion and Aphiria, 2.8 billion have shocked the stock market with increases of more than 200%.

Legal aspects to be considered

Currently, most of the countries around us are immersed in debates on the desirability of the total regulation of cannabis. A distinction is made between recreational cannabis, which is only regulated in Canada, Uruguay and some US states, and medical cannabis for therapeutic use, which has already been approved in more than 30 countries.

And in light of the latest WHO recommendations that advocate recognising the therapeutic value of cannabis and removing it from the IV list of dangerous narcotics with no medicinal value, there are no arguments left for the other states, including Spain, not to proceed with its regulation.

Cannabis investment opportunities

The sector is on the verge of a quantum leap and exponential growth. It is therefore also time to think about and invest in the sector before it reaches its peak and saturation.

Here are three ways to be able to invest in medical cannabis in a balanced, rational manner:

This type of asset can be acquired through specialised brokers where the main listed companies in the market can be located. According to XTB, some of these include:

Canopy Growth, one of the best-known companies in the sector. When it debuted on Wall Street 3 years ago, its shares rose more than 30%.

Aurora Cannabis has eight licensed manufacturing sites in Canada. Five sales licences and operations in 18 countries, with a capacity of more than 500 tons of annual production.

Tilray is another major player in the sector. It is based in the USA, but through various subsidiaries it can export to countries such as Chile, Argentina, Switzerland and South Africa, among others. It is listed on the London Stock Exchange, Frankfurt Stock Exchange and NASDAQ.

Investing in cannabis through REITs

REITs are companies that pool funds from small investors to invest in real estate and go public. In the cannabis sector these properties include for example cultivation facilities, research facilities, production facilities, etc.

Innovative Industrial Properties Inc. founded in 2016 became the first REIT in the cannabis sector to list on the New York Stock Exchange.

Cannabis ETFs

ETFs are very accessible assets for investors. As with shares, exchange-traded funds are bought and sold through the usual financial brokers and during the same trading hours.

Horizons Medical Marijuana Life Sciences is an ETF in which the investment is spread across different medical cannabis-related companies. It has been listed in the US, Canada and Germany since April 2017 and since then its price performance has been on the rise, especially on the Canadian stock exchange.

Investment in marijuana in Spain

In Spain, there is no regulation on medical cannabis, although there are certain medicines issued by social security, such as “Sativex”, which are only exceptions in a non-existent legislative framework.

The current law regulating cultivation for export, not for domestic use, dates back to 1967, and the drug agency is the licensing authority for cultivation, and to date only a few of licences have been issued.

The British fund GHO Capital, specialised in the health sector, after merging Juan Abelló’s Alcaliber laboratory for more than 200 million euros, is now the depositary of the first authorisation from the Spanish Agency for Medicines and Health Products (AEMPS) to cultivate, produce, export, distribute and market cannabis for therapeutic use. It has an installation in Murcia, according to sources consulted, and this year they will have their first harvest.

Another licence granted in Spain belongs to DJT Plants Spain, which appears to have not yet cultivated in Spain.

Freedom Leaf, the US company based in Las Vegas, has a 40,000 square metre greenhouse dedicated to producing poinsettias, a plant very similar to hemp, and according to the company, the aim is to turn the greenhouse into a leading producer of cannabinoids in Spain. It also bought Green Market Europe, a hemp producer in Elche.

Finally, Aphiria has announced its intention to buy the Spanish company Cafina, a hemp producer in Callosa de Segura, Alicante.