How Wall Street Is Taking an Interest in the Marijuana Industry



Investor rush

Marijuana is still classified as a Schedule 1 drug in the United States and is illicit under federal law. This has created several issues for businesses. For example, marijuana companies in states in which the drug is legal do not have access to the banking system as regular businesses do.

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ETF performances

However, this hasn’t deterred investors’ enthusiasm, as we can see in the performance of the ETFMG Alternative Harvest ETF (MJX) and the Horizons Marijuana Life Sciences Index ETF (HMLSF). These funds are a way by which US investors can access Canadian marijuana stocks.

In our series Must-Knows before Investing in the Marijuana Industry, we discussed how the marijuana industry is entering the mainstream investment market in North America and around the world. The recent wave of marijuana legalization for recreational purposes is driving investors’ enthusiasm.

In California, for example, recreational marijuana became legal on January 1, 2018. Just a few days ago, Vermont also legalized recreational marijuana, making it the ninth state in the United States to do so. Read more at Vermont Legalizes Recreational Marijuana on January 22, 2018.

Wall Street takes an interest

Given this vast potential opportunity, investment banks such as Cowen and Company have taken a great interest in the marijuana industry. Cowen believes that recreational marijuana could be a $50 billion business.

While the United States is holding back on legalizing marijuana for recreational use, Canada is on its way to legalizing recreational marijuana at a federal level in 2018. This would make Canada the second country after Uruguay to legalize recreational marijuana countrywide.

Not surprisingly, several companies have established bases within a stable and developed market such as Canada. These include Canopy Growth (WEED) (BUDZ), Aurora Cannabis (ACB) (ACBFF), MedReleaf (LEAF) (MEDFF), and Cronos Group (PRMCF).

Canaccord Genuity, another investment banking and financial services company, initiated its coverage on the marijuana industry last year. Let’s look at what it has to say.


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