Marijuana's ambiguous legal status appears to have little effect on cannabis investment euphoria.
Putting money into the marijuana industry has become one of the hot topics for stock market investors.
The internet abounds with articles and a rapidly increasing number of advertisements ready to advise people on what marijuana stocks to invest in and how to maximize a cannabis-heavy stock portfolio.
Some compare it to the tech boom of the late 1990s. Whether that is true remains to be seen.
Viridian Capital Advisors specializes in financial and consulting services for marijuana businesses. They also have developed the Cannabis Stock Index, which follows about 50 publicly traded legal marijuana companies. All must meet the following criteria:
A $10 million market capitalization
An average daily trading volume of at least $20,000
A float (outstanding shares) of at least 25 percent
Financial reports filed on time for at least the last six months
Among the stocks tracked include GW Pharmaceuticals and Zynerba Pharmaceuticals. Another solid performer often mentioned is Kush Bottles, ticker:KSHB. The company produces packaging for the cannabis industry, and has had very impressive revenue gains, as well as something usually not seen in cannabis companies: Profits. Unlike some companies in the sector that trade on hype, KUSH trades on performance. The company continues to exhibit solid management, revenue growth, and a sound business strategy.
Viridian plans to launch a cannabis Exchange Traded Fund at some point in the future. One issue blocking that is insufficient liquidity with some of the stocks including in the index, requiring frequent rebalancing within the index. That’s something that the company hopes will change as the industry grows, said Viridian CEO Scott Greip, according to MarketWatch.
Still, the Cannabis Index offers some insight into how marijuana investors are doing.
Tracking these stocks, Viridian now issues a weekly report on the status of the index.
They found that after a flat first half of 2016, the Cannabis Index rose sharply in the second half of 2016 as legalization votes in a number of states got closer and then were approved by voters.
Those gains included almost 31 percent in the third quarter and 155 percent in the fourth quarter.
For the year, the gains rose to 256 percent.
So far in 2017, the index started flat, but rose about seven percent the last week of January.