The cannabis industry, thanks to a radical shift in public perception and incremental legalization, has become one of the fastest growing markets in the world.
An industry report estimates that in 10 years, the total cannabis market could be worth over £100 billion. Today, the total market cap of the top 100 cannabis stocks around the world is over £60 billion.
Yet, the road to participating in this burgeoning market, as an entrepreneur, investor, or consumer, is still shrouded in a regulatory haze. Through our research and conversations with experts in the field, we have gathered four essential tips for any potential cannabis investor.
- Understand that medicinal legalization ≠ full legalization ≠ a fully functional market.
Back in November 2018, medicinal cannabis became legal in the United Kingdom. Under this new law, specialist consultants, rather than GPs, are allowed to prescribe cannabis-derived medicines only when a patient’s needs cannot be met by another licensed medicine.
So, while legalization of medicinal cannabis is a unarguably a large step, it is not the full deregulation one might imagine. It is important, then, as a potential investor, to understand that this law provides only very specific routes towards legally consuming cannabis medicines.
- Research, especially evidence-based, is everything in this new market
Clearly, then, the cannabis market is one that demands from those hoping to participate a rigorous level of independent research. Today, evidence-based research into cannabis is a growing field of its own as scientists now have far greater leeway to investigate the plant and its capacities.
As an investor, the phrase ‘do your own research’ has always been a standard of good practices. However, that has never been more true than in the cannabis market. Real information is out there, but given the level of haziness around regulation, disinformation can fester more freely.
- In moving the cannabis industry forward, the essential gap to close is between institutions, both medical and governmental, and the law.
The National Institute for Health and Care Excellence (NICE) is set to publish new guidelines in October 2019 regarding cannabis medication-- from proper prescription avenues for doctors, to best practices for customs officers handling the drug’s import.
It is essential for any cannabis investor to keep an eye out for these guidelines, especially as they will provide the foundation for the NHS’ eventual ruling on whether it will routinely fund the drug for those select patients.
- Investment interest has been growing exponentially-- now there are actual opportunities.
Even if progress seems to come in waves, the cannabis market is aeons ahead of where many thought it could ever be. While there remain these regulatory questions, 2019 will also be the year in which many cannabis companies IPO.
Most notably on this list are companies such as Pax Labs, a cannabis-focused vaporizer company that has raised over $20 million from investors just last fall. Pax, co-founded by the minds behind the launch of nicotine vaporizer Juul, does not handle any cannabis itself and so could very likely list on major exchanges, such as the New York Stock Exchange.
These companies navigating an IPO are just the latest opportunity in this ever-growing, ever-expanding, multi-billion pound industry.
The author is not a registered investment adviser, nor authorized or regulated by the Financial Conduct Authority and does not provide investment advice or recommendations. Prices of the investments referred to in the article (if any) are indicative only and may go down as well as up and investors may realise losses on them. This article should not be read as an offer or recommendation to buy or sell or a solicitation of an offer or recommendation to buy or sell any securities. Although based on information believed to be accurate and complete, the content of this article is not guaranteed to be accurate or current and the reader should conduct independent verification. No liability is accepted for any loss or damage incurred from acting or not acting on this article which is educational only and does not constitute legal, investment or financial advice.