Marijuana-Producing Companies for 2018
While 2018 has shaped up to be anything but kind to the marijuana industry, marijuana-producing companies still continue to see massive investor interest.
Why? Simple: the upside. There’s still a tremendous amount of upside in marijuana cultivation stocks and related companies operating in this space. While the largest weed producers in the U.S. are not publicly traded for a number of reasons (which I’ll elaborate on below), that doesn’t mean marijuana producer stocks in the U.S. aren’t worth looking at.
Let’s take a look at the best publicly traded marijuana companies, but before we do that, allow me to explain why the marijuana-producing companies that are publicly traded are not U.S.-based.
The Best Publicly Traded Marijuana Companies Are Canadian
While select states have legalized medical marijuana, recreational marijuana—or both—the drug still remains illegal under U.S. federal law.
As such, it is illegal to transport marijuana or cannabis across state lines. Producers are, therefore, legally bound to produce all the cannabis they sell in-state.
As you can imagine, such a massive curtailing of the potential market has limited these companies’ expansion prospects.
Canada, however, faces no such barriers. In fact, the current federal government ran partly on a platform of totally legalizing marijuana across the entire country—for both medical and recreational use.
This has garnered Canada a reputation as a weed-friendly country and, since the current government assumed power with a mandate to legalize the drug, we’ve seen an explosion in both the number of companies and the value of Canadian marijuana stocks.
So for now, Canada is the home of marijuana-producing companies that are legally traded. Although California, which is both larger and richer than Canada, has legalized marijuana, U.S. investors looking to get into the market will have to turn their eyes north.
That brings us to the best marijuana cultivator stocks.
Weed-Producing Companies List
The company just announced a three-year supply deal with the Quebec government that will see it sell 12,000 kilograms of marijuana to the province. Canopy Growth stock soared by 10% this week as a result of the news. (Source: “Canopy Growth completes three year supply agreement with the Société des alcools du Québec,” Cision, April 11, 2018.)
Most importantly, Canopy Growth is a marijuana-producing company that is a very good option for U.S. investors, especially those who are hoping to make inroads to the marijuana market in the U.S. as it slowly opens up.
Chart courtesy of StockCharts.com
Consider that major U.S. companies have shown serious interest in Canopy Growth stock.
Constellation Brands, Inc. (NYSE:STZ) completed a blockbuster deal with Canopy that helped kicked off the massive run that we saw Canopy Growth stock undergo at the end of 2017.
Constellation put in about $191.0 million for a 9.9% stake in the marijuana company. (Source: “Alcohol Industry Targets Pot With Constellation-Canopy Deal,” Bloomberg, October 30, 2017.)
The seller of “Corona” beer thought it was best to join the potential competition, and it has since mentioned that the two companies are partnered in finding ways to cross-promote products.
Another big reason why U.S. investors ought to have Canopy Growth stock on their radar is that the company has stated that it’s looking to get a listing on a major U.S. stock exchange.
This is big news, since the vast majority of marijuana companies either trade over-the-counter (OTC) or on Canadian exchanges. Being on the Nasdaq, for instance, would be a huge boon for the company, and it would signal Canopy Growth’s intentions to become more internationally focused.
Speaking of the Nasdaq, there is currently only one pure-play weed company on that stock exchange: Cronos Group Inc (NASDAQ:CRON).
Cronos joined that exchange in 2018 and was immediately flooded with interest and capital.
Just look at the trading volume in March on the chart below and you can see a massive spike in the number of trades and the stock value when CRON stock went live on the Nasdaq.
Chart courtesy of StockCharts.com
Now, this makes Cronos one of the best marijuana-producing companies for U.S. investors who are hesitant about Canadian tickers or OTC markets.
However, I’ve had my doubts about the long-term value of CRON stock versus other stocks, such as Canopy Growth stock.
Still, there’s a lot to like about the potential of CRON stock.
As for its interest in the U.S., Cronos made a deal with MedMen Enterprises, one of the largest American suppliers of marijuana.
While the deal primarily focuses on getting MedMen into Canadian markets ahead of legalization in that country, the two companies have said they are looking into expanding Cronos’s presence in the U.S. as well.
CRON stock, to me, is more volatile than Canopy Growth, but that doesn’t mean it has no upside. It’s riskier, sure, but it’s also likely to have bigger payoffs.
Not to mention, the company is one of the most American-friendly marijuana investments available.
Cronos stock has had a rocky run in 2018 (like many other marijuana companies), but its value shot up by 15% this week alone after it lost significant value since its entrance onto the Nasdaq.
U.S. investors who are interested in marijuana-producing companies, unfortunately, are largely shackled to Canadian companies that are traded on Canadian stock exchanges.
That’s simply the nature of the beast at the moment. But, despite them being Canadian companies operating on lesser-known exchanges, these are still great businesses that have amassed a huge amount of gains over the past few years.
This year has been a difficult one for the marijuana market so far, but that doesn’t mean there isn’t value to be found, and that extends to U.S. investors.