Thursday, March 27, 2014

Marijuana stocks: cannabis fuels 2014 "green rush"

Cannabis stocks have had a big run this year. With the recent legalization of recreational marijuana use in Colorado and Washington, and growing public support of further legalization efforts in the U.S., the nascent pot industry is springing to life. 

If marijuana legalization goes national, which may happen in 10-15 years, estimates on sales could range from $10 billion to over $100 billion annually.    

Marijuana stocks infographic invest
Marijuana stocks infograph via

Because there are few large cap plays on the sector, info on publicly-traded marijuana firms, mostly traded in the OTC market, has been a bit harder to come by. 

Since we've been talking about marijuana legalization and cannabis stocks on Twitter and StockTwits (not the "royal we", but a group of us on the stream) quite a bit lately, I thought it'd be useful to put together a convenient list of publicly-traded cannabis plays here. 

Disclaimer note: I've added some thoughts on microcap "penny stocks" and OTC market risks in the paragraphs below. Please read these comments fully and manage your risk. It's your money, after all.   

List of marijuana and cannabis-related stocks (Updated - click ticker for share price and company info):

     AERO     AFAI    ATTBF    AVTC    BABL   BRDT    CANN    CANV    CARA    CBDS     CBGI     CBIS  

     DIGX      DIRV      EAPH    EDXC    ENDO    ENRT    ERBB   EXMT    FITX    FRTD     FSPM   GLCO   GRNH  

     GWPH    HEMP    HSCC   ICBU   LVVV    MCIG    MDBX    MDCN    MJNA    MNTR    MWIP   MYEC    
     MYRY    MYSK     NTRR    NVLX   OSLH   PHOT    PLPL    PMCM    REFG    REVO  RFMK    SKTO        

     SMG    SPLI    STEV    TAUG     TRTC    TWD.V   UTRM    VAPE    VAPR     WNTR     ZDPY.                                                                                                                

See also: the Marijuana Index, Dan Mirkin's 420 Index, and the Pot Stocks company list (updated forum thread).

Due to the fact that most of these companies trade in the OTC market, I want to point out that many of these companies have reporting standards that differ from listed companies on the Nasdaq and NYSE. You should not trade these stocks if you do not understand the unique risks in this market. 

Many of the stocks attached to hot themes or sectors are just fly-by-night companies with no real revenue stream, issuing press releases to entice "investors" or speculators to buy. Some stocks get halted by the SEC when there is a suspicion of manipulation or fraud.

While there are some real companies with real businesses (and a few OTC names do go on to be listed on the US exchanges), there are also a lot of quick boom and bust (or "pump and dump") plays. Some of these stocks may quickly go back to sub-penny prices.

This is also a "battleground" theme, as marijuana legalization efforts move along in fits and starts. If progress is hampered, or doesn't happen quickly enough, you might see quick declines throughout the sector. A lot of these microcap weed stocks have run up 300% - 500% or more in recent months, so their recent pullbacks may have farther to go.

See the tweets below for more on this...   

I have traded some of these cannabis shares in recent weeks, but have no positions in any of the companies mentioned above at the present time. Everything in this post is strictly an educational reference, so please use this stock list as a jumping off point for your research.

Lastly, I'd like to point out that I'm excited about the emerging cannabis industry and I hope some of these companies achieve real growth and success. I could have spent the last few years betting against this legalization trend and investing in something like for-profit prisons, but that would not have made me a happy person. 

War on Drugs Prison Population Increase

To profit, even greatly, from something as disastrous and destructive to human beings as the "War on Drugs" would be a hollow endeavor. I'd rather go long some cannabis stocks and invest in personal freedom, choice, and innovation in cannabinoid medicines. Here's to the "green rush" and a freer, healthier America!

"The illegality of cannabis is outrageous, an impediment to full utilization of a drug which helps produce the serenity and insight, sensitivity and fellowship so desperately needed in this increasingly mad and dangerous world" - Carl Sagan

Related posts:

1. Round Trip Stocks: Momentum Booms and Busts

2. Prohibition's rise and fall: EconTalk interview with Daniel Okrent.

3. Sen. Rand Paul's testimony against the Drug War.

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