Monday, December 19, 2016

The Marijuana Market

        The marijuana market is the fastest growing market/industry in the world. After doing some research and reading online in an article written by Tirthankar Chakraborty, "The industry grew 24% to $5.7 billion last year," and "the industry is expected to grow by $7.1 billion this year," AND "that legal cannabis industry sales will grow more than 200% to $22.8 billion in the next four years" (4 Best Marijuana Stocks to Play the Green Rush, Zacks).



     I found the same research in other articles as well. The marijuana industry is moving full speed ahead. More and more people think the drug should be legal for recreational usage and even more think medical use should be legal nationwide. 


     Currently there are 28 states that have voted to legalize the use of marijuana for medical purposes and 8 that have voted on the legal use of recreational weed. Those states being Washington, Oregon, California, Alaska, Nevada, Colorado, Massachusetts, and Maine for those of you looking for a new home. In my opinion and seemingly many others, the legal use of recreational marijuana will continue to be passed in many states. In 2015, the revenue from selling pot on Colorado was just about $1 billion dollars. Like woah that's a ton of money in one year. So obviously as more and more states vote to legalize it the tax revenue will continue to grow and then money.

     With all of that money swirling around you begin to wonder where it's all going? Who is profiting the most from all of this legalization? Which companies are in the thick of this and how can I get involved? That's what I've been thinking anyway. After doing some googling and some researching I have come across a few that kept popping up. Whether they be profiting from the recreational side or the medical side. Below I am going to give you a list compiled of companies found from 6 different articles including: The company name, ticker symbol, on how many articles they were mentioned, overview of the company, a chart view, and how they are connected to the legalization of pot. Without further ado and in no particular order...





GW Pharmaceuticals [GWPH] [4]



     A brief overview of this company shows that they are based in Cambridge, United Kingdom. GW discovers, creates, and sells cannabinoid prescription medicines. Wikipedia says that a cannabinoid is one of a class of diverse chemical compounds that acts on cannabinoid receptors in cells that alter neurotransmitter release in the brain. Basically they are researching and finding drugs that can act on receptors in the brain to alter brain transmissions. Currently they market Sativex; a spray to help the spasms caused by multiple sclerosis. GW is in the Phase III for Epidiolex as well as Phase I and II for a drug used to help adult epilepsy and schizophrenia. In their 'About Us' section of their website, they say, "Our lead product candidate is Epidiolex® (cannabidiol) for certain rare and severe early-onset, drug-resistant epilepsy syndromes." They go on to say they have a deep pipeline of additional clinical stage cannabinoid products which is good news for their future growth. Other news articles I perused say that GW and their Epidiolex is performing really well in its epilepsy trials. Basically, GW is looking to develop cannabinoid based drugs that will help people with different variations of spasms. 



The charts are just so you guys and girls can get a better view of what the stock has done over the past two years and a couple months. Overall, this stocks technical indicators are not strong. Nothing is giving this a buy signal besides the fundamentals of the company. In this instance, and all the other stocks I'll list below are the ones I like based on the fundamentals. I haven't even looked at the charts yet. Just keep that in mind. 
     This company is connected to weed in that they are doing research into how cannabis can affect the neurotransmitters in the brain to help medically. As more and more states vote to legalize the medical use of marijuana and possibly if something federally happens the stock could go to the moon. Or it could take a dump like last December.





Scotts Miracle-Gro Company [SMG] [3]



     When I first saw Scotts I was incredibly surprised. This was not the company I was envisioning having a hand in the marijuana market. They manufacture, produce, and sell garden and lawn products/equipment worldwide. Scotts is composed of a lawn segment, a gardening and landscape segment, and a controls segment (pests). They distribute all of their products under dozens of brand names and to all types of distributors. They are headquartered in Marysville, Ohio. Year to date, they are up roughly 50%. Pretty solid. When I think of Scotts I think of fertilizer and lawn care. I think when most people think of Scotts that what comes to mind.  So it doesn't surprise me that it is in that segment where they are making a push in the pot market.



I could argue that the technical indicators say that SMG is overbought and due for a correction in the short term. I could also argue that the chart formed a hanging man symbol last week which can signal the start of a downtrend. But like I said last time...fundamentals. 
     I hinted at it before as to how Scotts is in the weed game. In the past year, Scotts has been buying up companies that are market leaders in hydroponics. The company created an owned subsidiary in Hawthorne Gardening Co. in an attempt to capitalize on the profits coming from urban growers using hydroponics. Part of the reason they did this was because their lawn care segments weren't growing and more and they needed to innovate and find ways to keep their business growing. Another part is due to the fact that most of the people using hydroponics are people who are now legally allowed to grow weed. While this section of their business only accounts for around 10% of their revenue, the margins they make from it are very high. For this stock and company, as more states vote to legalize the recreational use of marijuana look for the revenue to increase drastically and with it their stock price. 






AbbVie [ABBV] [2]


     Abbvie is a company that resides in the healthcare sector. They discover, develop, manufacture, and sell their pharmaceutical products world wide. They are most know for Humira, an injection for the benefit of autoimmune diseases. AbbVie has a few other well known drugs and just submitted a new drug application regarding Hep. C. Another important, well known drug they created is called Imbruvica. This one is an given orally for the treatment of chronic lymphocytic leukemia. To summarize, they are a big drug company that manufactures helpful drugs for a lot of people. It is one of the 6 largest companies in its sector. 




The chart on this guy looks okay. A nice potential MACD crossing and an increasing stochastic. Not perfect by any stretch of the imagination, but not bad. 

     How are they related to pot, you ask? Me too. Let's find out. AbbVie has a drug called Marinol. At this particular time, it doesn't do much to increase the profits of the company. They don't even announce the sales of it I think because it is so menial to their bottom line. But it has already been approved by the FDA. Marinol works similarly to the drug from GW in that it targets the cannabinoid receptors. The difference is that Marinol uses synthetic cannabinoids meaning they have bypasses the need for growing or acquiring marijuana.  It's used to treat nausea and vomiting from chemotherapy as well as restoring hunger in AIDS patients. In 2014 AbbVie submitted a liquid form of the drug to the FDA for approval because the current pill form created negative side effects and took too long to start helping. Unfortunately, it looks like cancer isn't going away. As long as the medical use of marijuana continues to grow, then so will Marinol and with it AbbVie.





Cara Therapeutics [CARA] [2]



     Cara Therapeutics is classified in the healthcare sector but further classified as biotechnology. Finviz describes Cara as a clinical-stage biopharmaceutical company. They develop and commercialize chemical entities to help relieve pain.  Their website says they are focused on developing therapeutics to help with pain and inflammation. The stock price started this year at about $16 and dropped to in the $4's in February. 




It has tried to make a comeback since February and it is currently sitting above the 50 day exponential. Other than that there isn't a whole lot going on. But the fact is that Cara is working with the marijuana industry and has room for growth. They are connected to the medical marijuana market in that they have conducted research with cannabinoid receptors like a few others. So as long as medical use gets legalized they'll continue to grow.






INSYS Therapeutics [INSY] [4]



     INSYS came up quite often in the articles and I'm pretty excited to see what this one is all about. They are a biotech company headquartered in Chandler, Arizona who develop and commercialize supportive healthcare. They have a pain relief spray marketed as Subsys for cancer patients who have become tolerant to opioid type pain relievers. It's best performing product is Syndros; a liquid form of dronabinol. Interestingly enough, another name for dronabinol is actually Marinol. If you recognize the word Marinol, it's because that is the drug that AbbVie is marketing. A common brand of dronabinol is Marinol, for reference. INSYS is also working to create a synthetic cannabidiol, an Cannabidiol Oral solution, for children suffering from severe epilepsy. Cannabidiol is one of at least 113 active cannabinoids identified in cannabis.



The chart here shows that this is the lowest price this stock has been in a little over 2 years. With the future legalization of medical and recreational pot, probably, there no doubt in my mind that this company can grow. The only question, and the question with all of these is if they can take advantage of the ever growing marijuana market and get a foot in the door with their medicinal uses. INSYS is connected to the weed market in a very similar way that AbbVie is connected to the weed market. As the medical use of marijuana becomes legal in more states then the better this companies products will do. 





Cannabis Sativa [CBDS] [1]


     This is the first company first hand working to create the best legal quality cannabis and hemp. They have ambition to shape the recreational use of cannabis and market industrial hemp to shape the future legal environment. It is their goal to brand and the market the highest quality cannabis products to the market with their hi brand while continuing to innovate the market. <--- Basically a summary of their website. Cannabis Sativa is working on research for natural products like edibles, topicals, and different strains of cannabis. 



The first thing that I notice is that the 200 day moving average is above both of the 50 day averages. This bodes well for the possibility of a golden cross. This is pretty obvious in how it is connected to the overall marijuana market. As more and more states vote to legalize the recreational use of marijuana and Cannabis Sativa can get a handle on some market share then they have the ability to grow. Just today (12/20/16) they purchased land in California to grow their product. This one is traded with the penny stocks on the over the counter market. 





Aurora Cannabis Inc [ACBFF] [2]


     Aurora is a Canadian company that grows their own crop for medical usage. They boast that they have some of the cleanest plants that is fed by water from the rockies in a state of the art lab designed specifically for cannabis growth. They are offering three different strains right now and have 11 others in the works. Their website shows the different levels of THC and CBD within each strain while including the type. Aurora also has free shipping of the product Canada wide. Their website makes it look real easy to get started. You just need to sign up, get a doctors note and then you're all set. 

It looks as though this stock was overbought leading up to the election we had. I am in the process of finding out if they ship within the United States. If they do then I understand why that would happen. The legalization of the medical use of marijuana was being built into the stock price before election day every happened. Once it did, looked like people realized that was the case and started selling off to capitalize on their profit. If they can ship to USA then as long as medicinal use keeps being legalized they may continue to grow. Otherwise I don't know. 


     Clicking through the articles can give you a few more companies that I didn't write about. Some were because the stock price was trading at such a low price while others were because I couldn't find that much info on them. I hope the list I compiled gives you some insight into the possible implications of the legalization of marijuana. Whether you smoke, don't smoke, are for it or against it, it's hard to argue with the fact that more and more people are voting to legalize this drug. It can do a lot of good for a lot of people. 



     A couple things to note before I sign off here. The legalization of weed could have been built into the companies before the election even took place and which could be why most took a little dip from then until now. Also, if states vote to legalize medical and/or recreational, there is no guarantee that these companies will grow from it. Much of that depends on what they do moving forward with research and development, marketing, and their current tests. The list above ARE stocks I am looking at myself for 2017 and on, but I am not going to say buy them. That's up to you after you do your own research on top of what I found above.





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