Interest in the pot industry
Lately, the investment community has generated a lot of interest in the marijuana industry, thanks to its legalization for recreational use in California as of January 1, 2018.
Cannabis use for recreational purpose is still illegal at a federal level in the US (as of the date of this writing). But Canada is expected to legalize the use of marijuana for recreational purposes in mid-2018.
In the above chart, you can see the recent one-year performance of four marijuana stocks listed in the US and Canadia, in addition to two ETFs.
The stocks listed in the US (SPY) significantly underperformed their Canadian counterparts. For example, AbbVie (ABBV) delivered a return of 56% in the last-one-year period, while Scotts Miracle-Gro (SMG) returned just 14%. Insys Therapeutics (INSY) lost 6%, while Corbus Pharmaceuticals (CRPB) lost 5%.
On the other hand, Canada’s Aurora Cannabis (ACB.TO) returned 423%, while Canopy Growth (WEED.TO) returned 329%, and Aphria (APH.TO) returned 295% over the last-one-year period. MedReleaf (LEAF.TO), which began trading in June 2017, has already returned 257%.
ETF investors that don’t like the high risk of investing in individual stocks have also gained significantly over the last-one-year period. For example, the ETFMG Alternative Harvest ETF (MJX), which is listed on the New York Stock Exchange, returned 52%, and the Horizons Marijuana Life Sciences ETF (HMMJ.TO), which is listed on the Toronto Stock Exchange, returned 133%.
Notably, HMMJ only began trading in April 2017.
In this series, we’ll take a closer look at some of the recent developments in the marijuana industry, discussing some of the catalysts and risks surrounding this market. In the final part, we’ll discuss how investors can access the marijuana industry.