Secondary Exposure To Marijuana Stocks May be the Key to the Market


There are only a small amount of stocks in the cannabis industry that have direct exposure to the actual market, but several secondary stocks could potentially be quite solid for a portfolio. Some peripheral stocks in the industry might shock investors such as Jack in the Box (JACK), Microsoft (MSFT). The secondary exposure to the market may be the key to finding solid gains in the cannabis industry.

One of the top secondary stocks in the market continues to be Scotts Miracle-Gro (SMG). Scotts, which began as a lawn and garden care company has since become one of the primary suppliers of growers in the cannabis industry. They recently announced as well that they would be buying the company known as Sunlight Supply, a large U.S. hydroponic distributor, for almost $500 million. This has been quite difficult though considering the large amount and confusing nature of cannabis legislation around the country. Scotts Miracle-Gro saw its stock drop slightly in the beginning of January, when slow changes in the cannabis market in California led to a series of drops in the industry. This can be somewhat attributed to people learning how to take advantage of such a new market, but it is still up in the air.

Another company in the space that is attracting a lot of attention is known as Cree (NASDAQ:CREE). Cree is primarily a lighting company that produces LED lights. Although they cost more than other lighting in the market, it is widely regarded as the best for this part of the industry. LED lights are highly used in the growing process of cannabis as they can often mimic certain types of lights that otherwise could only be attained in an outdoor setting. These lights also produce less heat and use up less electricity than other types of lighting, leading them to be the industry choice for indoor growing.

One of the newest ways to get into the cannabis industry without having full exposure is through the use of Marijuana ETFs. Popular ETFs in the market have been ETFMG Alternative Harvest (MJ) and the ETF known as AdvisorShares Vice ETF (ACT). These funds have acted as intermediaries to those who don’t want to take the full risk of having exposure to marijuana companies but still want the gains. The Alternative Harvest ETF includes stocks in the market such as GW Pharmaceuticals, which has been one of the main pioneers throughout the cannabis pharmaceutical industry. GW (GWPH) has produced several drugs that have been groundbreaking in the treatment of everything from cancer to seizures and beyond. The fund also contains others like Aurora Cannabis and the Cronos Group (CRON), which recently became the first pure-play cannabis stock to be listed on the NASDAQ exchange.

Other funds in the industry such the AdvisorShares Vice ETF follows the industry as well as others such as alcohol and tobacco, but it also includes some of the stocks mentioned above that have a large dependency on the cannabis industry, but no direct exposure to the market.

One stock that may be surprising to see associated with the cannabis industry other than for the purpose of munchies is Jack in the Box (JACK). Jack in the Box has been targeted by pot enthusiasts for some time now, but they recently partnered with the company known as Merry Jane, a cannabis website co-founded by Snoop Dogg. The website has launched a promotional meal by the company that “commemorates the legalization of recreational cannabis in California.” It seems as though Jack in the Box will always have a place in the cannabis market indirectly.


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