Medicinal Marijuana Stocks vs. Recreational Marijuana Stocks
With all the excitement that’s building up over the coming marijuana legalization in several states across the U.S. and nationwide in Canada, it’s easy to get caught up in the hype surrounding the recreational marijuana business. But as we all know, in the stock market, hype doesn’t always lead to a healthy payoff. In contrast to recreational marijuana stocks, medicinal marijuana stocks are less controversial, more accepted, and have a proven business model that’s been operating for years. So for investors trying to pick a side in the medicinal marijuana stocks vs. recreational marijuana stocks contest, does one have a clear advantage over the other?
The answer, dear reader, is yes. Right now, the market is clearly favoring one type of marijuana stock over another. Recreational marijuana stocks are faring better compared to medicinal marijuana stocks in 2017, precisely because of the hype I mentioned earlier. With so much built-up anticipation due to the relaxation of marijuana laws across North America, what we’re seeing is that marijuana stocks 2017 are decidedly favoring the recreational hype over the more stable—if less exciting—medicinal business.
Just look at some the biggest names in the marijuana stock market—on both sides of the divide.
GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) and Insys Therapeutics Inc (NASDAQ:INSY) are down big in 2017. Of course, neither exclusively deals in marijuana products so there are other factors at work, but their weak performance in 2017 so far is enough to show that at the very least, medicinal marijuana stocks are not seeing the boost that the recreational market is experiencing.
GWPH stock is down over nine percent since the beginning of the year. INSY stock has fared better but still finds itself having a poor showing in 2017 with a net loss of 3.5%.
These two companies are some of the more prominent operators in the medicinal marijuana stocks space. As such, when the industry booms, you can expect these two companies to benefit. But they have yet to see really impressive gains from the marijuana boom. Or at least, yet to see and sustain impressive gains from the green tide.
On the other hand, recreational marijuana stocks have been having a great run the past few weeks. While 2017 was a rough year to start, especially compared to the massive gold mine that was 2016 for marijuana stocks, some of the biggest companies in the industry have quietly had a solid year, or even a great one, depending on your expectations.
Chart courtesy of StockCharts.com
CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF), one of the biggest players in the industry by market cap, has seen gains of over 17% since the beginning of the year. While those with a 2016 hangover might think that’s a tad on the low side, the majority of investors with reasonable expectations should view 17% gains as a great year. While Canopy Growth does operate a medicinal marijuana business as well, most of the excitement around the stock is due to its prominence in the Canadian market, which will legalize marijuana in the summer of 2018.
Another company that demonstrates recreational marijuana stocks outpacing their medicinal counterparts is APHRIA INC COM NPV (OTCMKTS:APHQF). Aphria has gone from a hair over $5.00 this year to being worth $7.12 as of the writing of this article, making it not only one of the big marijuana winners in 2017, but also an enticing marijuana penny stock.
Which is to say that recreational marijuana has sucked up all the oxygen in the room and put medicinal marijuana on a ventilator…at least for now.
Recreational marijuana is the beneficiary of hype and hope, both of which are not unfounded, but both of which can be, at times, inflated. But the numbers look good and we know that a billion-dollar industry is just around the corner, waiting to be opened up to its consumers. In that case, if you have to pick between medicinal marijuana stocks vs. recreational marijuana stocks in 2017, you’re better off going for recreational for the highest gains.