This is a landmark week for investors in one of 2018’s most active market segments, as Canada has officially opened its doors to become the world's largest federally legal cannabis market.
The long-awaited move has long-term implications in sectors ranging from healthcare to retail, as scientists and entrepreneurs continue to discover new uses for cannabis and cannabis-infused products.
In the short-term, nobody really knows what the change in law will mean for the public cannabis markets. Cannabis has always been a volatile sector, dating back to when the first cannabis stocks began trading several years ago. And the industry’s incredible growth this year has only attracted an army of new investors eager to put their money to work.
Growth in the cannabis market has happened in both the exchange and the over-the-counter space. Just how big has the publicly traded cannabis sector gotten?
In August and September, U.S.-listed stocks like Tilray Inc TLRY, Cronos Group Inc CRON and Canopy Growth Corp CGC each more than doubled in price over the course of a few weeks. Currently, there are over 400 cannabis or cannabis-related securities that trade over-the-counter in the United States, which represent the vast majority of public cannabis companies. As of October 15, 2018, roughly 136 securities trade on the two premium OTC Markets’ tiers, accounting for over 28 percent of year-to-date dollar volume in OTCQX and OTCQB securities. Nearly 22 percent of share volume for the total OTC Market takes place in cannabis-related companies.
Investors can track the performance of public cannabis companies via the OTCQX Composite Index and OTCQX Canada Index, which went up 2.5 percent and 7.5 percent respectively in the third quarter. According to OTC Markets, home to over 10,000 equities not listed on a U.S. exchange, this improvement in price is primarily due to the price improvement in marijuana-related securities in Canada.
Recently, the most popular of these securities by dollar volume has been Aurora Cannabis Inc. ACBFF, which traded about $2.02 billion worth of shares in September. This was followed by Green Organic Dutchman Holdings Ltd. TGODF and Green Thumb Industries Inc. GTBIF, which traded $274 million and $224 million worth of shares in September respectively.
Several over-the-counter cannabis securities such as Organigram Holdings, Inc. OGRMF and General Cannabis Corp. CANN traded more than $500 million worth of shares in 2018, according to OTC Markets.
Over a quarter of the 400 securities are traded on international exchanges, and the companies they represent come from the U.S., Canada, Australia, the U.K., Israel, and more. Though Canada is the largest nation to legalize the use recreationally, countries like Israel and U.K. currently lead the way on the pharmaceutical uses of cannabinoids.
All this is to say, that while Wednesday represents a milestone for the cannabis industry, we’re still only in the opening innings. There’s likely a lot of growth to come for smart companies and the savvy investors who can identify them.
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