This year has been one of the most instrumental in the history of the marijuana stock world. New laws have come into play and a new market has emerged as people are becoming more accepting of legal weed than ever before. With this new industry has come the turmoils of any infant market. Many companies are seeing their prices fluctuate greatly due to a good deal of uncertainty as to the future of the market and the present industry. Now, of course cannabis is an industry with a great amount of intrinsic value since companies are producing a physical product, but legal measures and the history of the industry are shaping the next two to three years of growth.
The companies that have been able to benefit the most as the year comes to a close are the pure-play growers of cannabis in its various forms. As stated before, these companies produce a physical product that has and will have a tremendous amount of value. With as much as $5 billion in annual sales to be expected as the industry grows, there’s a lot of room for new and innovative growers in the marijuana market. As the year ends, we have been able to see a series of new trends emerging that contribute to whether or not investors feel a positive sentiment regarding investments.
One of the major trends in the marijuana space has been speculative trading. Since the industry is so new, investors are still working out how to trade stocks in the market. This has resulted in a large amount of speculative trading based off of not only news, but the advent of various legal measures. Because of the shifting sentiment in the industry, stocks that deal with cannabis are subject to fluctuations that are unseen in other financial spheres. Well at first this may seem like a turn off, it actually holds with it a great deal of opportunity for day-traders or those who wish to hold onto cannabis for the long term.
Next Green Wave (NGW) is a great example of a company that has benefitted from growth in the marijuana producing space. As a business, Next Green Wave intelligently chose to center their company within the Californian market which is subject to be one of the largest in the world when at full capacity. Because of this, Next Green Wave has been able to use the influx of new capital to begin funding the growth of 80,000 square feet of space to produce cannabis. Given that they are fully vertically integrated, their margins on said cannabis are stated to be some of the highest throughout the market.
Vertical integration in the marijuana industry has proven to be one of the best methods of producing a large spread on the product. Not only are they able to make a substantial profit, the quality control on the cannabis is bar none, some of the highest we have seen in the industry. The companies commitment to quality and future-proofing the business has been one of the main reasons so many investors have poured in.
Another example of this is OrganiGram Holdings (OTC:OGRMF). OrganiGram is currently sitting with a market cap of around $600 million which puts them in the mid-tier of cannabis stocks. OrganiGram has managed to quickly become one of the largest domestic growers of cannabis throughout Canada which should put them ahead for the new year. Of course, they have been working to build out new facilities to help meet the increased demand of the newly legalized market, but all in good time. With a new facility being build in New Brunswick, it is only a matter of time before they are able to be at full capacity in the coming few years.
The end of the year is always an exciting prospect for new markets because it gives investors and those who participate in the industry a solid chance to look back and toward the future. Only time will tell how marijuana can continue to be reshaped as we move on to the next year or exciting prospects for cannabis.
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