Ladies and gentlemen, the green rush is real. Weed, pot, marijuana, or – as it’s actually called – cannabis sativa, whatever you want to call the plant, there’s no doubt that it’s been a big part of many cultures on the planet for thousands of years. Cannabis contains a naturally occurring chemical compound named tetrahydrocannabinol (THC) that can induce physical and psychoactive effects for both medicinal and recreational purposes. Since the 1930s, cannabis production and consumption has been driven underground by the federal government of the United States, who spearheaded a global movement to ban the naturally growing plant. Despite its illegal status, it’s still widely consumed all across the world through inhalation (via smoking or vaporizing) or oral consumption (isolated into pills or cooked into food). A 2004 UN study estimates that 4% of the adult population on earth (162 million people) used cannabis annually and 0.6% used cannabis daily (22.5 million people).
In 2012, Colorado and Washington simultaneously passed bills to legalize the production and consumption of cannabis for adults aged 21 and over. This social and economic experiment came into effect on January 1st, 2014, when various dispensaries and shops opened up to begin selling to the general public. Since the cannabis industry hasn’t operated legally in nearly a century, many people and organizations have been eagerly anticipating and watching the unfolding results.
The investment community has been particularly interested in the results of legalization in Colorado and Washington. The legalization of cannabis is increasingly popular among the population year-after-year, and it appears to be the direction that we as a society are headed in. Naturally, when legalization happens on a federal level, there is going to be a huge cash crop – no pun intended – that will open for those bold enough to foray into the uncharted territory. In fact, people are so certain that cannabis is headed towards full legalization that they’ve already begun creating businesses to service the cannabis industry. Some of these companies are already publicly traded, and have shares that can be bought and sold alongside shares of any other kind of legitimate industry. Here are 10 cannabis stocks that could make quite a splash in 2014, ordered and ranked by market capitalization – the total value of all shares on the market. All figures valid as of April 16th, 2014.
10. FusioPharm — Market Cap: $8.42 Million
Although not strictly a cannabis startup, the future of FusioPharm is indirectly tied with the future of cannabis, and the company knows it. They bill themselves as being involved in the controlled environment agriculture business and sell a product named the PharmPod, a 40-foot container used to cultivate crops in optimal fashion. The reason that they are viewed as a cannabis stock by many is that – much like rolling papers for ‘tobacco’ – the agriculture premise hides its true potential for cannabis cultivation. Growing tomatoes in a PharmPod would make for an expensive crop of tomatoes. Used to grow cannabis though, well, there’d be an adequate return on investment. FusioPharm currently has a market capitalization of $8.42 million, and individual shares trade at $3.59.
9. AVT — Market Cap: $30.57 Million
AVT Inc. describes itself as being in the ‘automated teller’ business. They build automated, ‘smart’ vending machines that handle full retail transactions. They have patented software for their machines that make it a complete automated retailing experience, which caught the eye of another member on this list. The lucrative partnership has propelled AVT’s shares – which trade under the ticker AVTC as an OTC stock – to $2.69 each with a market capitalization of $30.57 million.
8. Cannabis Science — Market Cap: $78.7 Million
Cannabis Science is a biotech company, stacked to the brim with PhDs, whose company mission is to research and produce medicinal products derived from the key chemical components of the cannabis sativa plant. The company isolates tetrahydrocannabinol (THC) and cannabidiol (CBD), among other chemicals, to create products to treat a various range of illnesses. With cannabis expected to become a huge medicinal crop, Cannabis Science has positioned itself to be a leader in the field, and already has a market capitalization of $78.7 million.
7. TerraTech — Market Cap: $99.83 Million
TerraTech, like FusioPharm, is in the controlled agriculture business, but TerraTech is slightly more upfront with its intended market. The company offers hydroponic and aeroponic growing systems and digital atmospheric controllers to keep lighting, humidity and C02 at optimal levels. They offer products for both commercial agriculture and retail agriculture, to service the needs of various cannabis producers. The stocks are traded on the OTC market – currently at $0.68 a share – and have a market capitalization of $99.83 million.
6. mCig — Market Cap: $140 Million
mCig’s product offering is a fairly unique one in comparison with some of the others on this list. The company’s operations are based almost entirely on a single product, a small, convenient inexpensive ($10) vaporizer for both marijuana and tobacco that also is the company’s namesake – the mCig. The company positions itself as an organization at the cusp of two trends, marijuana legalization and the slow replacement of smoking through the use of vaporizers. With a market capitalization of $140 million, it’s easy to see that investors believe the hype is real.
5. Advanced Cannabis Solutions — Market Cap: $238.91 Million
The needs of a the fledgling cannabis industry have yet to be fully explored and understood, but there is one company – Advanced Cannabis Solutions – which intends to position themselves as an entity to serve those needs. Presently, their main business is finding, purchasing and leasing key growing spaces and facilities for cannabis producers. They’ve also expressed interest in pursuing other areas like legal compliance consulting and logistics services. Based in Colorado Springs, in the heart of the nascent cannabis industry, Advanced Cannabis Solutions can leverage their location to acquire more industry experience and knowledge than their competitors out of state. They trade on the OTC market, under the ticker CANN, and have a market capitalization of $238.91 million.
4. GrowLife — Market Cap: $404.66 Million
GrowLife’s slogan is ‘Helping Businesses Grow,’ and the business activities the company is involved in lend credence to their motto. GrowLife specializes in producing high-quality equipment for hydroponic plant production to both large commercial growers and retail growers, but they do more than just that. They offer financial and consulting support to other businesses in the cannabis industry, and aim to become a full-service support company. Rapidly rising stock prices this year (300% in January alone) have some investors erring on the side of caution in case it turns out to be a pump and dump scheme, but if GrowLife has legitimate interest in being a business and not just a hot trade, then the sky is the limit. As of writing they have a market capitalization of $404.66 million.
3. Medbox — Market Cap: $545.69 Million
Medbox are the unnamed partners of the aforementioned AVT Inc., #9 on the list. Medbox focuses on the sale and distribution of the automated vending machines – which they’ve partnered with AVT to make – to doctor’s offices across the United States (where medicinal cannabis is legal). They’ve already cornered the market where medicinal cannabis is legally prescribed, and with the rest of the country set to follow suit ,it’ll make an already large market significantly larger. Patients love the convenience of filling out their prescription at their doctor’s office and investors seem to be bullish on the concept, as the company already has a market capitalization of $545.69 million.
2. GW Pharmaceuticals – Market Cap: $663.19 Million
Unlike the other businesses that have sprung up around the changing winds of cannabis laws, GW Pharmaceuticals have been working on profiting from the effects of the cannabis sativa plant since the late 90s. Their flagship product, Sativex, is a medication used to treat multiple sclerosis that is derived from key chemical components in cannabis. Although most probably wouldn’t go as far as to classify them as strictly a ‘cannabusiness’, their association to the industry has certainly rallied their stock price, leaving them with a market capitalization of $663.19 million.
1. CannaVest — Market Cap: $899.27 Million
The hottest cannabis stock at the moment – one that could realistically approach a billion dollar market cap by the end of 2014 – is a Las Vegas based company named CannaVest that specializes in hemp production. For the most part, CannaVest foregoes working with THC extraction and concentrates on the non-psychoactive hemp components of the cannabis sativa plant. Hemp has a variety of uses in both industrial and personal settings, and is widely regarded as a huge potential cash crop. CannaVest owns a portfolio of companies who all work with hemp based products (such as hemp fibers and CBD oil) to best leverage the potential of this emerging cash crop. Investors have been extremely bullish on CannaVest stock, and if they continue on their current path they’ll be a market leader by the time legislation changes at the federal level.
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