May 30, 2023
Investing in Prime Medical Marijuana Shares for Novices
Investing in Prime Medical Marijuana Shares for Novices

Supply: Getty Photographs

The worldwide medical marijuana market is projected to develop at an annualized fee of virtually 18% by means of 2028, in response to Information Bridge Market Analysis. A lot of this progress will doubtless be within the U.S., the place 37 states have already legalized medical hashish. Medical hashish merchandise bought within the U.S. embrace dried flower, vaping concentrates, cannabis-infused edibles, and topical merchandise equivalent to lotion.

Traders who choose to purchase particular person medical marijuana shares can select amongst Canadian or U.S. corporations. Canadian medical hashish corporations can legally checklist on U.S. inventory exchanges, whereas U.S. medical hashish corporations working legally on the state stage can legally checklist on Canadian inventory exchanges and over-the-counter (OTC).

Earlier than you put money into medical hashish corporations, discover out what it’s worthwhile to find out about this rising sector.

Prime medical marijuana shares to purchase proper now

These 5 medical marijuana shares are high buys for 2023:

Information supply: Yahoo! Finance. Information present as of March 10, 2023.
Medical Marijuana Inventory Market Capitalization Description
Village Farms Worldwide (NASDAQ:VFF) $101.3 million Grows, produces, and sells medical hashish merchandise primarily for the Canadian market and cucumbers, peppers, and tomatoes for the North American market.
Jazz Prescription drugs (NASDAQ:JAZZ) $8.6 billion Develops cannabis-based pharmaceutical medicine.
Trulieve Hashish (OTC:TCNNF) $1.3 billion Grows, produces, and sells medical hashish merchandise in a number of U.S. states.
Modern Industrial Properties (NYSE:IIPR) $2.3 billion An actual property funding belief with many U.S. medical hashish corporations as tenants.

1. Village Farms Worldwide

Village Farms Worldwide’s roots lie within the recent produce enterprise. The corporate nonetheless generates barely greater than half of its complete income from promoting cucumbers, peppers, and tomatoes. Nevertheless, Village Farms’ main progress driver as of late is hashish. 

The corporate’s Pure Sunfarms ranks because the top-selling model for dried hashish flower merchandise in a number of of Canada’s greatest leisure marijuana markets, together with Alberta, British Columbia, and Ontario. However Village Farms is poised for sturdy progress within the medical hashish area, too.

Pure Sunfarms obtained European Union Good Manufacturing Practices certification in March 2022. This paves the best way for the enterprise to start delivery merchandise to key European medical hashish markets, together with Germany, starting within the third quarter of 2022. 

In the meantime, Village Farms already sells hemp-derived cannabidiol (CBD) well being and wellness merchandise within the U.S. market. The corporate hopes to enter the U.S. hashish market if and when marijuana is legalized on the federal stage.

2. Jazz Prescription drugs 

Jazz Prescription drugs turned the most important cannabis-focused drug developer following its acquisition of GW Prescription drugs in Could 2021. Sativex, developed by GW, is a medical hashish drug that incorporates each the high-inducing tetrahydrocannabinol (THC) and the non-psychoactive CBD. It treats spasticity related to a number of sclerosis. Epidiolex, additionally developed by GW, is a CBD drug. Sativex is authorized in a number of nations, excluding the U.S., and Epidiolex is authorized in each the U.S. and Europe.

Epidiolex, which generated gross sales of greater than $658 million in 2021, is considerably boosting Jazz’s income. Its gross sales progress ought to proceed with a latest business launch in Eire and a 2022 launch in France. As well as, Jazz is evaluating Epidiolex in a part 3 scientific research as a possible therapy for epilepsy with myoclonic-atonic seizures (EMAS).

Jazz is just not a pure-play medical hashish firm. It makes the sleep problem medicine Xyrem and Xywav, which account for greater than half of its gross sales. Jazz additionally sells the most cancers medicine Rylaze, Vyxeos, and Zepzelca.

3. Trulieve Hashish

Trulieve Hashish is a vertically built-in U.S.-based hashish firm that grows medical hashish and distributes medical hashish merchandise to its personal retail dispensaries. The corporate’s main operations are in Florida, the place it runs 114 medical hashish dispensaries and instructions a market share of near 50%. Trulieve additionally has operations in Arizona, California, Colorado, Connecticut, Massachusetts, Maryland, Nevada, Pennsylvania, and West Virginia.

Trulieve’s acquisition of Harvest Well being & Recreation in October 2021 made it essentially the most worthwhile U.S. multistate hashish operator. The deal additionally resulted in Trulieve changing into the most important U.S. hashish firm based mostly on retail and cultivation footprint. 

In contrast to most of its friends, Trulieve frequently delivers quarterly earnings. The corporate’s earnings progress stays sturdy, which provides Trulieve appreciable monetary flexibility to put money into increasing its enterprise. 

4. Modern Industrial Properties

As an actual property funding belief, or REIT, Modern Industrial Properties is the main actual property supplier for the U.S. medical hashish business. The corporate buys properties from medical hashish operators after which leases the properties again to the operators, offering wanted money to rising hashish companies and steady revenue for Modern. 

Modern Industrial Properties at present owns properties which are leased to tenants in 19 states. The corporate is rising its buyer base not solely within the states the place it already operates but additionally in extra states that legalize medical or leisure hashish.

Few medical hashish shares have delivered the extent of progress that Modern Industrial Properties has achieved. In the course of the previous 5 years, the corporate’s income has skyrocketed greater than 4,500%, whereas its earnings have vaulted practically 7,700% increased. This efficiency has enabled the inventory to generate an virtually nine-fold acquire.

As a REIT, Modern Industrial Properties distributes not less than 90% of its taxable revenue to buyers within the type of dividends. The corporate’s constant profitability is due partially to its diversification throughout many tenants. 

How to decide on the most effective medical marijuana shares

Traders ought to take into account the identical key attributes for medical marijuana shares that they might for any inventory:

  • Monetary efficiency: Many medical marijuana corporations aren’t but worthwhile, however the most effective corporations have clear and outlined plans for reaching profitability sooner or later. The most secure corporations even have loads of money, which creates monetary flexibility and preserves the worth of the inventory.
  • Progress alternatives: The patchy regulatory framework of the marijuana sector implies that medical hashish corporations’ progress prospects differ broadly. The very best corporations are minimally restricted by geographic constraints.
  • Aggressive place: Main medical marijuana corporations have excessive manufacturing capability, loads of distribution channels, and useful partnerships with established corporations.

For those who do not need to select particular shares, one other solution to acquire publicity to medical marijuana shares is to purchase shares in a cannabis-focused exchange-traded fund (ETF). Such funds confer instantaneous diversification throughout the hashish sector (though at present no pure-play medical hashish ETFs can be found).

Associated Investing Subjects

Must you purchase medical marijuana shares?

Investing within the medical marijuana sector is comparatively dangerous so long as hashish stays federally unlawful within the U.S. The plant’s federal standing additionally constrains the expansion of the sector, and buyers don’t have any assure that the federal authorities will proceed to permit states to deal with hashish as authorized.

However the long-term prospects of the medical marijuana business are wonderful. Extra nations and U.S. states are recognizing the potential advantages of medical hashish and legalizing the use and sale of medical hashish merchandise. Extra people and the broader medical neighborhood are additionally recognizing the plant’s medicinal advantages, driving demand increased for medical marijuana.

Danger-tolerant buyers with lengthy investing horizons are more likely to revenue by investing in medical marijuana.

Keith Speights has positions in Modern Industrial Properties. The Motley Idiot has positions in and recommends Modern Industrial Properties, Trulieve Hashish, and Village Farms Worldwide. The Motley Idiot has a disclosure coverage.