Marijuana Packaging Companies
There is more than one way to make money from marijuana investments. While cannabis cultivation and smoking apparatuses may receive the bulk of the attention paid to the marijuana industry, there are a variety of other ancillary sectors that are prone to see big gains.
The following is a look at marijuana packaging companies, including some of the best stocks in the sector.
The potential for growth in the marijuana industry has, in some cases, made marijuana packaging companies as enticing as the marijuana growers.
One of the stocks featured below has even outperformed the marijuana industry, with gains of over 30% so far this year. Considering that a good chunk of marijuana stocks have been floundering in 2018, due to an industry-wide correction, those 30% gains are all the more impressive.
There’s a reason that these companies have such value.
One reason is a very simple equation: the more weed you sell, the more packaging you’ll need. It’s not exactly rocket science. Marijuana companies need their goods packaged like any other industry and, therefore, providers are going to see an uptick in value as the pot market continues to grow.
But where marijuana is different than other industries is that it is a formerly illegal drug now finding its way into the legal marketplace. That transition entails a long, often complicated legal process in which packaging factors in as a major component.
In Canada, for instance, as legalization approaches this summer, the federal government had to figure out how exactly it wanted to institute packaging laws for marijuana products. (Source: “Bags, pouches, boxes – cannabis packaging offers opportunity,” The Globe and Mail, February 1, 2018.)
While a number of smaller companies have risen to the challenge of providing packaging expertise, companies that are able to do so on a large scale are going to reap the benefits of the industry’s coming growth.
That makes some of these packaging companies excellent long-term marijuana stocks, since they face less competition than cultivators while maintaining a good amount of exposure to the potential of the marijuana market.
This is one of the few marijuana subsectors where both the U.S. and Canada have about equal footing.
While cultivation has favored Canada, due to legal complications in the U.S., packaging is less under threat and, therefore, we see more companies operating in this space that are from the U.S.
Any company that learns the ins and outs of complying with the different state regulations when it comes to packaging stands to see strong gains in its stock value.
In fact, this is one of the rare cases where the fractured nature of the U.S. marijuana laws actually favors companies. The more different cannabis packaging regulations that exist, the more opportunities there are for packaging companies to sell their products.
This also makes marijuana packaging companies some of the most valuable U.S. marijuana stocks by virtue of them being U.S.-based, when so many other marijuana companies are based in Canada.
That being said, let’s take a look at some of the best marijuana-related stocks available right now.
Best Marijuana Packaging Stocks
In my mind, of the marijuana packaging companies currently available on the stock market right now, one stands tall above the rest.
Kush Bottles Inc (OTCMKTS:KSHB) is the premier stock among marijuana packaging companies.
The California-based company also maintains operations in Washington state and Colorado, giving it strong access to a number of lucrative markets in the U.S.
Being a U.S.-based company also means that it’s likely to appeal more to marijuana investors who want to invest but would rather put their money into a company in America rather than Canada.
Chart courtesy of StockCharts.com
Kush Bottles is, as mentioned above, up 30% this year. That’s a very impressive margin over the past three months, considering the current correction in the marijuana industry.
And to make things even better, the company had a very successful quarterly report. Revenue soared by 249% year-over-year to almost $10.4 million. (Source: “Kush Bottles Second Quarter Sales Surge 249% to $10.36 Million,” New Cannabis Ventures, April 11, 2018.)
Cash balance also jumped exponentially to $7.1 million, compared to $0.9 million in August. This came by way of a $6.0-million equity investment from Merida Capital Partners.
Kush Bottles stock is worth well over $5.00, making it more reliable than other marijuana packaging companies that are often penny stocks.
The one drawback of KSHB stock is that it is currently only traded over-the-counter (OTC).
As such, it is a little bit of a riskier venture than, say, a company that is established on an exchange like the NYSE or the Nasdaq.
This is a problem that pretty much universally plagues this sector, with most companies operating in this space being OTC only.
But what makes KSHB stock superior to a competitor like, say, Acology Inc (OTCMKTS:ACOL) is that Kush has some more foundation to its stock, due to its price being in the $5.00 range.
Chart courtesy of StockCharts.com
Acology, by contrast, is worth one penny and is down over 40% since the beginning of the year.
Trading such low-value penny stocks that also aren’t listed on a trusted exchange is a pretty risky venture. Trading on any stock that only trades OTC carries with it increased risk, but Kush is able to mitigate some of that risk due to its size.
When it comes to marijuana packaging companies, I believe that the best play for marijuana investors is Kush Bottles stock.
The company has the right size and has demonstrated the growth potential to be a good long-term marijuana stock.
It also serves as one of the more reliable marijuana-related stocks, due to its size and value proposition.
While there are several marijuana packaging companies to choose from, in my mind, most of the other choices are far too risky to be solid long-term marijuana stocks.
A final takeaway is for marijuana bulls to be on the lookout for different ways to profit from the marijuana industry’s boom.
While the simplest and most direct way involves investing heavily in cultivation stocks, ancillary industries like packaging or smoking apparatus producers all provide clever ways to gain exposure to the industry without investing in potentially over-hyped companies.