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The Arrival of Marijuana

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Updated

Has the marijuan industry arrived?

In the preceding part of this series, we discussed how the ETF Horizons Marijuana Life Sciences ETF (HMMJ.TO) and MedReleaf (LEAF.TO) only began trading in 2017. But that doesn’t mean that 2017 represents the beginning of the marijuana and cannabis industry.

The history of cannabis spans across centuries. In Canada, the use of cannabis for medical purposes (XLV) has been legal since 2001. Stocks such as AbbVie (ABBV), Scotts Miracle-Gro (SMG), Insys Therapeutics (INSY), and the Corbus Pharmaceuticals (CRPB) have been around for years, though they don’t exclusively serve the marijuana industry.

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Catalysts

Before investing in any stock or an industry, investors have to conduct research on the future prospects of an industry.

In the US, marijuana and its derivative products have been in legal use primarily for medical purposes. The marijuana plant contains cannabidiol or CBD, which is largely used for its medicinal purposes and is not psychoactive.

Research has indicated that use of CBD in to the appropriate degree helps reduce anxiety, inflammation, depression, and mental illness. The NIH (National Institute on Drug Abuse) indicated that using cannabis may be helpful in treating certain cancers.

In the above chart, the marijuana sales for both medical and non-medical use is estimated to reach $20 billion by 2020 according to Arcview.

The medicinal properties of cannabis could act as a catalyst for investments in the industry, but there are still risks that investors may want to consider before jumping in. We’ll discuss these risks in greater detail next.

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