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Investing in the Cannabis Industry



If you're a trader or an investor, you're probably constantly looking for the best investment opportunities. Fortunately for you, the market is not modest and has opportunities left, right, and centre in new and well-established sectors. On the more contemporary side of things, we have the cannabis industry that's on the up and poised to be one of the major players in a few years.

However, as things stand, the cannabis industry is still highly regulated and volatile, which tends to put off some of the more wary investors. So what happens if you decide to use the best UK stock brokers to invest in the industry? Hopefully, you will make money and see why once we show you how you can also dip your feet in the cannabis waters.

How to Invest in Cannabis

Even though the cannabis industry is still in its infancy stage in most parts of the world, it has nonetheless started to take shape, and we can already see where the opportunities lie. In a nutshell, you can categorise the industry into three possible investment opportunities:

  • Growers and retailers- are the companies responsible for creating the actual product and
    getting it to consumers.

  • Medical- these are the pharmaceutical companies experimenting with cannabis and
    creating medical products for patients.

  • Ancillary- these are intermediary companies providing cannabis products or services to
    other cannabis companies.

Now that you have an overview of how the industry looks, you can better understand and know where you're most comfortable investing.

Furthermore, many products are coming out of these sectors servicing industries such as food and beverages, oils, perfumes, medicine, and even gadgets. And as the technology and regulations around the industry continue to improve, notions around cannabis and profits are getting better.

In the next section of this piece, we'll look at stocks and investment opportunities in the cannabis market you can take advantage of today.

  1. Pure Play Cannabis Stock

According to laws in the UK, publicly traded pure play cannabis companies are only allowed to deal in one thing, cannabis in this instance. They mainly operate in the consumer goods market and medical realms and in line with the country's strict regulations on the recreational use of cannabis. Some examples of such companies include:

  • Kanabo Group (KNB)- this London-based company produces over-the-counter CBD
    used in vapes. It has a market cap of £15 million, one of the highest in the industry, and
    it's currently trading at 3p per share. The company is also in the process of developing
    its own vaping product, and we think it's only going to do better after its introduction.

  • Cellular Goods (CBX)- this is a wellness company that produces skincare products and
    supplements made from cannabis. Its market cap is £7.1 million, and shares are currently
    trading at 1.5p. Even though this company has a long way to go before it gets in the
    black, we love its products and feel it has the potential to go all the way.

  1. Cannabis ETFs

If investing in a single company's share is not yet lucrative or exciting enough for you, you can invest in a handful of them with ETFs. However, there is only one ETF in Europe, and you might need to look across the pond for more options.

  • Medical Cannabis and Wellness Fund- This fund was established by Purpose investment,
    a Canadian asset manager, and the German trading company, Deutsche Boerse. Like
    most ETFs, it's passively managed and listed on the London Stock Exchange. In addition,
    the management fee is 0.08%, which is a bit excessive for this kind of fund.

Also consider the following

Investing in a growing industry can be risky but lucrative if it's the right product. For instance, during Tesla's IPO some years back, some bought a Tesla while others shares in the company for the same amount. Fast forward to today, the value of the same shares is more than $4 million, and the car's value has all but gone up in smoke. Pardon the pan.

The cannabis industry is the same today. There is a lot of resistance from people and authorities, but once we have proof of concept, we'll not all be junkies because it's legal to smoke weed. You will wish you had invested early.