Thursday, August 15, 2013

The Growth of the Medical Marijuana Industry and the Stocks that Participate

In November of 2012, the United States began the next revolution in American history. But this isn’t the railroad boom of the industrial revolution, or the booming importance of the Internet in the technology revolution. Instead, states like Colorado and Washington passed laws in 2012 that will pave the way for the medical marijuana revolution and will change how the nation accepts cannabis culture. But along with users who enjoy the opportunity to use marijuana for personal use, there is also a huge opportunity for investment for those that are looking to make a large financial gain.

Tax Revenues

Aside from all of the medical marijuana users who enjoy using for personal reasons, governments have also gotten ‘high’ after seeing the amount of money the industry turns over. In 2012, Colorado estimates that it brought in nearly $200 million in tax revenues. For a nation that is struggling to remain atop of the world economies, this is an eye-opening number. For those that are looking to invest, these numbers are important to keep in mind due to the value that they have on the national economy. If something is so profitable and helps the country dig into its national debt, it will only rise in value as it becomes more acceptable throughout the rest of the country. This garners amazing investment opportunities for those looking to invest in the marijuana industry.


Aside from the money, the medical marijuana industry provides jobs for people. The larger the system gets, the more people are needed to work in the process of growing, harvesting, distributing and selling marijuana. If the tax revenue wasn’t enough to peak the interest of the government (hint, it is), then seeing the unemployment rate drop and even further bolstering the economy is another added benefit to keep in mind with the legitimacy of cultivating marijuana. This is an added safety net of concern for those looking to invest in the medical cannabis arena.

Establishment Support

Lastly, marijuana is no longer looked at with such negativity and stigmatized opinions. Influential names across America like US Attorney General Eric Holder, who has proposed more leniency for drug offenders, CNN’s Dr. Sanjay Gupta support of medical marijuana legalization, and many more high-ranking officials have voiced their opinion on the financial and health benefits that medicinal marijuana provides. Even major health journals, such as Nutricula Magazine has espoused the legalization of marijuana for its health benefits.

Investment Opportunities

If you are an investor who is considering buying stocks in medical marijuana, consider that a lot is weighing in favor of the huge growth of the industry. Like anything, there is risk when investing. However with the financial, employment and health benefits that medicinal marijuana provides, the industry has already begun to catch enough momentum that it has captured the eyes of investors.
Most of the companies related to medical marijuana are very low cap stocks, according to the free list of over 20 marijuana stocks at However, for the medical use of marijuana and its derivatives, there are larger companies that produce such products as Marinol, which is synthesized THC, also known as dronabinol, and available by prescription in the US. This is a product of Solvay SA (SVYSF). However this is just a small part of this large chemical conglomerate.
Nabilone, marketed as Cesamet, is produced by Valeant Pharmaceuticals International (VRX), which trades on the New York Stock Exchange. Nabilone, a synthetic cannabinoid, is used to treat chemotherapy-induced nausea and vomiting, anorexia, and weight loss in AIDS patients. Valeant also markets Fluorouracil, a cancer treatment drug, and Diastat, a seizure drug. This $31.5 billion market cap stock trades at 7.87 times sales. Revenues for the latest quarter were up 33.6%, however, earnings were negative.

GW Pharmaceuticals (GWPRF) produces Sativex, an oral spray with tetrahydrocannabinol and cannabidiol, which is used to treat multiple sclerosis patients, and also for treating pain in cancer patients. This $137 million company trades at three times sales. Revenues were down 34% for the latest quarter.

Some of the companies in this industry have already made major moves. For example, Medbox, Inc. (MDBX), which makes machines that can dispense medication and medical marijuana to individuals based on biometric identification, has risen from about $2 a share a year ago to $35 a share today. Other microcap medical marijuana-related stocks that have recently started to move up are Cannabis Science Inc. (CBIS), Medical Marijuana Inc. (MJNA) which prints its stock certificates on hemp paper, CannaVEST Corp. (CANV), and Cynapsus Therapeutics Inc. (CTH.V). These are extremely low capitalization stocks that should be considered extremely speculative.

To see the complete free list of over twenty marijuana stocks, which shows the symbol, PE ratio, price sales ratio, yield, market capitalization, and business description, go to

Disclosure: Author owns MJNA.


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