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Marijuana - How to Invest in the Cannabis Market [GUIDE]
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Marijuana - How to Invest in the Cannabis Market [GUIDE]

created Alice NowakSEPTEMBER 16, 2020

It is estimated that the cannabis market will increase in the next 10 years due to the ongoing legalization processes and the increasing popularity of medical marijuana. These forecasts are not completely out of touch with reality, in 2019 global sales of hemp products increased by as much as 45% compared to the previous year.

The cannabis market, both legal and illegal, is currently worth around $ 150 billion, according to a report by Euromonitor International. Euromonitor International forecasts that the legal cannabis market alone will reach $ 2025 billion by 166. Is the market prosperity guaranteed? How to Invest in the Cannabis and Marijuana Market? We check.

Marijuana and the legalization of cannabis

The cannabis market is currently growing most dynamically in the United States and Canada. Medical marijuana is legal in 33 states, and recreational marijuana use is legalized in 11 states.

In Canada, medical cannabis was legalized in 2001, and recreational cannabis use was legalized in 2018. In Poland, it has been legal to use cannabis medical devices since 2017.

The most liberal cannabis laws in Europe have the Netherlands, Germany and the Czech Republic.

Currently, according to the company's analysis New Frontier Data, over 50 countries around the world have already legalized some form (medical or recreational) of cannabis. The trend of legalizing marijuana uses is likely to continue, making room for billions in profits in the industry.

Properties of hemp

Cannabis is characterized not only by psychoactive and medical properties. This plant has a number of uses that make it a very attractive raw material.

Cannabis is characterized by different cannabinoids, or chemicals, depending on the species and type. The most famous cannabinoids are THC and CBD.

Not only recreation and medicine

Hemp is a plant that can also be used in the FMCG (market for easily tradable goods) industries. Euromonitor expects hemp to hit the soft drink market in the form of CBD branded beverage brands for good.

Tobacco market

The progressive legalization of hemp products may be a revolution for the tobacco industry, whose popularity is declining every year. Tobacco producers are already willing to invest in cannabis producers and this trend is likely to continue.

Cosmetics market

Hemp is also used in skin care cosmetics and dermocosmetics. You can already find more and more products of this type in Polish drugstores.

Medical marijuana

Medicinal cannabis is a variety of cannabinoid CBD. It is a substance that has a beneficial effect in the course of many diseases, but has no addictive or psychoactive effects.

Therapeutic properties of CBD (medicinal hemp):

  • relieves pain,
  • protects the nervous system,
  • has anti-inflammatory properties,
  • has an anxiolytic effect,
  • has an antipsychotic effect,
  • it reduces the effects of withdrawal from addictive substances (heroin, cocaine, alcohol).

Medicinal cannabis has therapeutic properties in the case of diseases such as: multiple sclerosis, cancer, Alzheimer's, Parkinson's, Crohn's disease, migraine, depression, psychosis, and anxiety states. CBD from medicinal hemp also soothes the effects of chemotherapy.


Check it out: How to invest in luxury alcohol [Guide]


The hemp market in Poland

According to estimates by Prohibition Partners, by 2028 the size of the medical marijuana market in Poland will amount to EUR 2 billion.

The Polish cannabis market is primarily of interest to Canadian companies. HemPoland, the first private company with a license for the cultivation of industrial hemp in Poland, was acquired by the Canadian giant The Green Organic Dutchman Holdings Ltd. In turn, Olimax New Technologies from Kielce, owning the Glyana hemp variety, was bought this year by the Canadian company StillCanna.

Investing in the cannabis market

Projects

The largest companies on the global cannabis market are Canopy Growth Corporation, Aurora Cannabis and Tilray. All three companies are from Canada.

hemp canopy

Canopy Growth Corporation

The company was founded in 2013 in Ontario, Canada. Canopy Growth Corporation is currently the largest company in this sector in the world and was the first fully regulated cannabis producer in North America. Since 2018, over 35% of shares in the company have been owned by the American alcoholic beverages giant - Constellation Brands.

Aurora Cannabis

marijuana aurora

Aurora Cannabis operates in 25 countries and has a production capacity of 625,000 kilograms of hemp per year. Aurora Cannabis was founded in 2006 in Edmonton, Canada. It is the second largest cannabis company in the world. In 2008, Aurora acquired a number of German companies distributing medical cannabis to pharmacies.

Tilray

cannabis tilray marketThe third largest cannabis company in the world, Tilray, was founded in 2013 in Toronto, Canada. Outside of Canada, the company operates on the markets of Australia, New Zealand, Germany, Portugal and South America. Tilray produces and distributes medical cannabis.

Marijuana and stocks

Shares in "Hemp companies" we can buy through brokerage houses as well forex brokers. Below is a list of selected brokers with a significant number of stocks, CFDs on stocks or ETFs on offer.

Jak inwestować w rynek konopny: Brokerzy

Broker xtb 2 saxo bank logo small plus 500 logos
End Poland Denmark Cyprus *
Shares on offer approx. 3500 - shares
approx. 2000 - CFDs on stocks
16 exchanges
19 - shares
8 - CFDs on stocks
37 exchanges
approx. 3 - CFDs on stocks
23 exchanges
Min. Deposit PLN 0
(recommended min. PLN 2000 or USD 500, EUR)
0 PLN / 0 EUR / 0 USD PLN 500
Platform xStation SaxoTrader Pro
Saxo Trader Go
Plus500 platform

* PLUS500 CY offer

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

Global Cannabis Giants Index

An interesting investment alternative to stocks is the index Global Cannabis Giants, which aggregates the largest companies from this market. Thanks to this, instead of selecting several companies on our own, we can invest in the entire industry with one instrument.

marijuana Global Cannabis Giants Index

USCANNA chart, interval D1. Source: xNUMX XTB.

The index is available in the offer XTB broker under the symbol USCANNA. The leverage on this instrument is 1:10 and a short sale is also available (you can play for declines). Despite the significant sell-off of this instrument over the past 1,5 years, it is clear that the vast majority of investors see growth potential for this market.

marijuana results Global Cannabis Giants index

Statistics as of October 16.10.2020, XNUMX. Source: xNUMX XTB.

ETFs

A convenient form of investing in the cannabis market may be to purchase one of the following ETFs, which are baskets of companies from this sector.

[YOLO] AdvisorShares Pure Cannabis ETF

    • Issuer: AdvisorShares
    • Annual fees: 0.74%

The fund has $ 62 million in assets under management. Daily average spreads are 0.52% and annual fees are 0.74%. The fund invests in companies from the cannabis market, both from the US and other countries. A company may be included in the fund if it obtains at least 50% of its income from the sale of hemp-based products. The fund includes shares of companies such as: Village Farms International, Inc., GrowGeneration Corp., Aphria Inc.

[MJJ] MicroSectors Cannabis Index ETN

    • Issuer: BMO
    • Annual fees: 0.70%

MMJ is a fund that invests in companies related to the cannabis market from Canada and the United States. The fund manages $ 33 million, daily spreads are 0.81% and annual costs are 0.70%.

[THCX]The Cannabis ETF

    • Issuer: IssuerOBP Capital LLC
    • Annual fees: 0.70%

THCX is a fund that focuses on cannabis companies operating in the US and Canada. The fund only buys companies that earn income from legally trading cannabis products. There is $ 22 million in management, daily spreads are 0.91% and annual fees are 0.70%.

More and more forex brokers are expanding their offer with a range of ETF instruments. For example on XTB today we can find over 400 instruments of this type, in Admirals almost 397, a Saxo Bank almost 3000.

Broker xtb 2 saxo bank logo small Admirals
End Poland Denmark Great Britain / Cyprus
The amount of ETF on offer approx. 400 - ETF
approx. 170 - CFDs on ETFs
3000 - ETF
675 - ETF CFDs
397 - ETF CFDs
Min. Deposit PLN 0
(recommended min. PLN 2000 or USD 500, EUR)
0 PLN / 0 EUR / 0 USD PLN 5
Platform xStation SaxoTrader Pro
Saxo Trader Go
MetaTrader 5

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. From 72% to 89% of retail investor accounts record monetary losses as a result of trading CFDs. Think about whether you understand how CFDs work and whether you can afford the high risk of losing your money.

This article is for information only. It is not a recommendation and is not intended to encourage anyone to undertake any investment activities. Remember that every investment is risky. Do not invest money you cannot afford to lose.
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About the Author
Alice Nowak
An active trader on an individual Forex account since 2014, keenly interested in the subject of economy, business and capital markets. For over 10 years closely associated with the world of IT and new technologies, programmer, internet marketing enthusiast. Enthusiast of spending time outdoors surrounded by nature and greenery or practicing yoga.