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What is cannabis ?
A group of three plants with psychoactive properties, known as Cannabis sativa, Cannabis indica, and Cannabis ruderalis.
What is cannabis used for ?
Recreational cannabis
Recreational cannabis is defined as any form of cannabis used without medical justification. This type of product is traditionally associated with strains containing a high tetrahydrocannabinol (THC) content. THC produces psychoactive effects and the “high” associated with cannabis.
Medical cannabis
There is no consistent difference between recreational cannabis and medical cannabis. The strains of medical cannabis are typically more cannabidiol (CBD)-dominant. CBD-dominant strains do not elicit the psychoactive effects typically associated with recreational marijuana and are more common among medical medical patients.
Industrial cannabis
Industrial cannabis (Hemp) is used to make a variety of commercial and industrial products including rope, textiles, clothing, shoes, food, paper, bioplastics, insulation, and biofuel.
Cannabis market size and legislation ?
Market size
Market size based on New Frontier Data’s latest analysis,more than 260 million adults worldwide consume cannabis at least once per year, collectively spending $344 billion USD annually. As much of the world has not yet legalised any form, much of the demand is in illicit or unregulated markets.
Legislation
More than 50 countries worldwide have legalised some form of cannabis for medicaluse, and six, Canada, Uruguay, South Africa, Guam, Georgia, and the Northern Mariana Islands — have legalised cannabis for personal or recreational use. Yet, the legal, regulated markets command just a fraction of the global demand for cannabis.
Cannabis sectors
Growers
Growers are the companies that cultivate, sell and distribute cannabis
Biotech
Biotechs are the firms dedicated to developing and bringing pharmaceutical cannabis to market
Supply chain
Supply providers are those who provide the tools and materials needed to physically grow cannabis – such as light systems and fertilisers
Stock market listed cannabis shares
Most talked about cannabis stocks to watch
Canopy Growth Corp (CGC)
Canopy Growth Corp (CGC) is a cannabis company based in Ontario, Canada, which boasts 5.6 million square feet of production capabilities. The company was the first regulated and publicly traded cannabis producer in North America, which listed on the Toronto Stock Exchange (TSX) under the ticker WEED.
It later began trading on the New York Stock Exchange (NYSE) in May 2018, under CGC, and by late September it was the world’s largest cannabis company based on its market capitalisation of $11.5 billion. This followed a major deal in which Constellation Brands (STZ) – owner of Corona and other alcoholic beverage brands – invested $4 billion into CGC for a 38% stake in the company.
Shares of Canopy Growth reached an intraday high of $59.22 in October 2018, an increase of 54.5% from its $30.85 debut on the NYSE.
Cronos Group (CRON)
The Cronos Group (CRON) is a Canadian cannabis grower and distributer. It was first listed on the NASDAQ in March 2018 and was later listed as CRON on the TSX in May 2018.
Like most marijuana stocks, Cronos Group has experienced increased market interest due to the legalisation of recreational cannabis in Canada. This can be seen in the increase in its projected sales figures, which are up to 112 million Canadian dollars for 2019, compared with just 3.8 million Canadian dollars for the third quarter of 2018.
The Cronos Group share price increased significantly in December 2018 after Altria (MO) – the largest American tobacco company – reported interest in buying the company. On 3 December, shares of CRON traded in an intraday range of $8.55 to $11.58 on the back of the news.
Aurora Cannabis (ABC)
Aurora Cannabis (ABC) is a Canada-based cannabis producer with operations in 18 countries. Aurora Cannabis was listed on the TSX in April 2017 under the ticker ABC.TO, but, following other major cannabis producers, it listed on the NYSE in October 2018.
The move of so many Canadian cannabis companies onto US exchanges is thought to be in order to capitalise on the march toward the wider legalisation of marijuana in the US.
Although its initial public offering (IPO) and first two months on the NYSE were not as successful as hoped – with the share price declining from $8.23 in October to $4.85 in early December – analysts were still showing a lot of positivity around the potential of the stock.
Aurora Cannabis gained a lot of attention after its purchase of CanniMed Therapeutics in April 2018, which positioned it to increase its annual output to 283,000 kilograms. Looking to the future, Aurora Cannabis seems to be committed to further expansion.
Tilray (TLRY)
Tilray Corp (TLRY) is a Canadian pharmaceutical and cannabis company. Founded in 2013, Tilray was one of the first cannabis growers to receive a cultivation license from Health Canada.
Tilray was also the first cannabis company to list its shares on NASDAQ – it did so in July 2018 at $17 per share. Its stock hit a high of $300 in intraday trading on 19 September 2018, which briefly gave the company a market capitalisation of almost $28 billion. This rally was on the back of the expectation that Tilray would strike a deal with a partner in the beverage or tobacco industry.
Shares of Tilray traded lower after this high in September 2018, as concerns arose that a $28 billion valuation was unsustainable. But with production on track to reach between 75,000 kilograms to 85,000 kilograms per year, Tilray is still an interesting stock to watch.
HEXO Corp (HEXO)
HEXO Corp (HEXO), previously the Hydropothecary Corporation, creates and distributes cannabis products to serve the Canadian recreational market. HEXO is one of Canada’s lowest-cost producers, with a rapidly increasing production capacity – operating with a 310,000 square feet facility, with another one million square feet under construction.
HEXO grabbed the attention of markets in August 2018 when it was announced that it would be entering a deal with the Molson Coors Brewing Co (TAP) – a large alcoholic beverage company – to develop cannabis-infused drinks.
HEXO listed on the TSX in June 2018, having graduated from the TSX Venture Exchange. Its share price reached a high of $9.28 in October 2018 but subsequently fell back down to around the $5.01 level.
GW Pharmaceuticals Plc (GWP)
GW Pharmaceuticals PLC (GWP) develops cannabinoid medicines for the treatment of multiple sclerosis, cancer pains and childhood epilepsy. GWP listed on the alternative investment market (AIM) of the LSE in 2001, and listed on the NASDAQ in 2013, under the ticker GWPH.
Surprisingly, in October 2018, GW Pharmaceutical shares fell following the FDA approval of its cannabis-based drug, Epidiolex – from an all-time high of $179.00 to $139.18.
However, the estimates for sales of Epidiolex are close to $1 billion, with optimistic analysts thinking this figure could be closer to $2 billion, which has increased speculation about the future of GW Pharmaceutical’s share price.
Other Companies
Name
Aphria Inc
OrganiGram Holdings Inc
CannTrust Holdings, Inc.
Green Organic Dutchman Holdings Ltd.
Innovative Industrial Properties Inc
Supreme Cannabis Company Inc
Insys Therapeutics, Inc.
Emerald Health Therapeutics, Inc.
Corbus Pharmaceuticals Holdings Inc
Auxly Cannabis Group Inc.
Aleafia Health, Inc.
VIVO Cannabis Inc.
Newstrike Brands Ltd.
Currency
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Cannabis index
A cannabis index is a gauge of performance from a section of the cannabis industry. The price of a cannabis index will be derived from the prices of a selection of related cannabis assets. This could be the 20 top-performing cannabis stocks, for example.
The cannabis index market captures the gross total return performance of the 20 largest publicly listed US and Canadian companies with direct revenue exposure to the cannabis industry. The index is calculated and managed by BITA GmbH.
You can trade on the price of a cannabis index by using financial derivative products like spread betting and CFDs, and use them to profit whether the price is rising or falling.
How to trade cannabis?
You can only place trades on cannabis by spread betting or trading CFDs. This will enable you to trade both long or short. This allows you to take advantage of market movement, whether cannabis prices are rising or falling.
Types of market
Cannabis Shares
Cannabis Shares can only be traded as a CFD or Spread Bet.
Speculate on the movement of individual stocks across the cannabis industry, from growers to the firms bringing cannabis to market.
Cannabis Index
Trade cannabis as a stock index, taking your position on a price that represents the performance of the world’s top cannabis shares.
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