The cannabis industry is attracting very established executives and politicians into their C-suite. Tilray’snew international advisory board includes Governor Howard Dean (Vermont), Joschka Fischer (vice chancellor of Germany), along with senior government officials from Canada, Portugal, Australia and New Zealand. Aphria’s new independent board chairman is Ira Simon, the founder and former CEO and chairman of Hain Celestial. Cronos was just infused with a $2.4 billion investment from Altria (the owner of Marlboro and Philip Morris), giving Altria 45% ownership, with the possibility of taking ownership up to 55% with warrants. Constellation Brands (the owner of Corona, Robert Mondavi and other beer, wine, vodka and whiskey) invested $4 billion in Canopy Growth. MedMen’s board includes former LA Mayor Antonio Villaraigosa. Andrew Modlin, MedMen’s co-founder & President, received the Emerging Leaders Award in 2017 from the American Marketing Association.In short, cannabis is mainstream. Companies are making legitimate deals with Colombian farmers for supply. Most of the publicly traded cannabis companies are Canadian based, with greenhouse grow farms. Gone are the days of gangster movies about weed smuggling. Your grandmother might have even tried one of the products, particularly the CBD Oil. So, it won’t surprise you to learn that cannabis companies are exploding in sales growth.
Aurora Cannabis just announced that their revenue for the 2nd quarter (of 2019 fiscal year) will be $50-$55 million, compared to $11.7 million a year ago. This is 68% higher than 1Q 2019 and 327% higher year over year. The company will release their earnings report before the market opens on Feb. 11, 2019.
Aphria’s revenue growth exploded with 255% ascension in the most recent quarter. Cronos Group’srevenue rocketed up 186%. Tilray’s growth was an impressive 85.8%. Canopy Growth is the largest and perhaps most well known of the publicly traded cannabis companies. However, Canopy’s year over year revenue growth was only 33% in the last quarter.
All of these companies enjoy popularity among investors, trading millions of shares daily, and are listed in the NYSE or NASDAQ stock exchanges. Be careful of cannabis companies that are not traded on the big boards, have very thin trading activity and don’t have governance and financial information that is easily accessible. (MedMen is still trading off the boards in the U.S. with the symbol: MMNFF, and on the Canadian Securities Exchange in Canada, with the symbol: MMEN, putting this early stage company at higher risk than the other companies mentioned in this blog.)
The challenge of all of these companies is scaling quickly enough to meet demand, without compromising quality. With the experienced executives that are joining up the companies I mentioned here, these companies should have the talent and experience in place to execute, escalate and start vertically integrating their supply chain. So, when you’re looking for cannabis companies to invest in, be sure to look into who is running the company, along with the board and their qualifications, rather than just blindly investing. There are still plenty of scams out there, and opportunists looking to cash in on the trend. Penny pot stock marketers are still pushing pump and dump schemes, where insiders sell en masse as soon as the ruse attracts enough naïve investors.
A few more points:
- I’d steer clear of marijuana funds for now. It’s a better idea to invest directly in the companies of most interest to you, after careful analysis and once you have determined your exit strategy. Remember that exit strategies are key this late in the business cycle – even with companies that are experiencing astronomical growth. Apple Inc. took a nosedive in the Great Recession, even though it had just launched the game changing smart phone and managed to make it free to AT&T customers.
- Share prices have been exceedingly volatile in the publicly traded cannabis companies. (In the pink sheet penny pot stocks, there have been a massive number of pump-and-dump schemes, where investors lost everything.) While the long-term trend for cannabis and CBD Oil products looks like Mt. Everest, we’ve seen wild movements in the share price of the companies mentioned in this blog. For instance, Tilray’s all-time high was $300/share in September of 2018. It’s currently trading at $77.20.
- Again, be alerted that there is still a plethora of penny pot stock scams. Make sure that you know how to properly evaluate an individual stock, its financials and its leadership, and have an exit strategy, before you invest. To learn the strategies that I used to become the #1 stock picker, read Put Your Money Where Your Heart Is (aka You Vs. Wall Street in paperback).
Full disclosure: I own shares in many of the cannabis companies mentioned in this blog, including Cronos, Aurora and MedMen.
Article originally posted on https://www.nataliepace.com
Natalie Wynne Pace is the co-creator of the Earth Gratitude project and the author of the Amazon bestsellers The Gratitude Game, The ABCs of Moneyand Put Your Money Where Your Heart Is (aka You Vs. Wall Street). She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical).