Invest in Cannabis: Not Just for Recreation
Investing in financial assets related to Cannabis implies subscribing to one of the newer industries of the economy (in terms of a market that went from being 100% illegal to legal and fully extended in some countries). Many analysts agree that the Cannabis market has enormous potential as medical marijuana becomes more accepted among the population.
With Canada leading the pack and other recent legalisations worldwide, Cannabis has become one of the most talked-about investments since companies in this market have been among the fastest-growing in recent years. Key indicators include that 7% of Americans use Cannabis for medicinal or recreational use, based on different market consumer research. Also, it is projected that by 2025, the cannabidiol market will reach USD 16 billion and USD 130 billion by 2030. In other words, exponential growth is expected.
Several European countries will most likely legalise recreational and medical marijuana in the upcoming years (if they have not already done so). Furthermore, in March 2021, stocks related to Cannabis experienced robust growth since the State of New York passed a bill that legalises the recreational use of marijuana (So, not only the medicinal component plays its part in this market).
As mentioned previously, the demand for the production of Cannabis plants, their processes, and other derivatives will probably increase enormously in the upcoming years. This translates into potential profits for the companies operating in this market and, therefore, their shareholders.
How to Invest in Cannabis from the Philippines in 6 Steps
So, how do you jump in if the market grows and generates profits for the shareholders? Below we detail a simplified process.
Learn about the Cannabis Market and choose the Financial Instrument where you will operate. If you buy shares of a company, select the one you think has the most significant growth potential.
Choose the Online Broker with which you will buy the financial asset. The Broker will be the intermediary. Choose one that accepts local clients; some trading platforms do not accept Filipino clients.
Open a Trading Account with the Broker. In general, the account opening process with a Trading platform is online, with the account opening completed in a few days. However, using a Demo account to test its use is recommended. Try eToro's Demo for FREE.
Deposit Money. Many of the Brokers (most) do not have minimums deposit amounts; that is, you can start investing in Cannabis Assets with a few dollars or euros. In turn, many platforms allow deposits with credit cards.
Buy the asset with exposure to the Medicinal Cannabis market. Except for Trading platforms designed for professionals, most allow buying assets straightforwardly and intuitively.
Review your investments. Periodically check your investments' status, review the investment strategy, and make adjustments when you see fit.
Overall, Filipino investors who are looking to invest in Cannabis stocks, it is essential to do their due diligence and carefully research the companies and trends in the industry before making any investment decisions. This includes looking at the financials, competitive landscape, and growth prospects of companies, as well as considering factors such as regulatory risk, market trends, and the broader economic environment.
Financial Instruments to invest in the Cannabis Market
Assuming that the Cannabis market will experience exponential growth over the next few years, the profit potential with investments in this area will also do so. Therefore, the next step should be to choose the specific asset you wish to invest in. Here are some options to gain exposure to the medical marijuana marketing market:
Cannabis Stocks: The most prominent companies related to Cannabis that operate on the stock market are: Canopy Growth, Aurora Cannabis, Cronos Group, Hexo and Canntrust Holdings. Financial analysts at Jefferies consider Canopy Growth and Aurora Cannabis the companies "best positioned to dominate globally" in the upcoming years.
Cannabis Indices: Several trading platforms will provide an index describing the trajectory of the cannabis market. They are built with a set of different assets that trade in this market. This is one of the simplest options to get well-diversified exposure to this market.
Cannabis ETFs: This option is a bit more complicated because not many ETFs invest exclusively in Cannabis stocks. However, the biggest ones (in terms of assets under management) are ETFMG Alternative Harvest ETF, AdvisorShares Pure Cannabis ETF, and The Cannabis ETF.
Where Specifically Can I Invest in Cannabis Assets?
In line with the above, investment platforms, such as eToro, offer most of the financial instruments detailed above.
A diversified asset with easy access is eToro's CannabisCare portfolio, which works as an Investment Fund (more precisely, like an ETF). The individual investor invests in this index and is effectively investing in a complete portfolio of Cannabis Stocks. This option can be handy for those investors who prefer to diversify and do not intend to learn about each particular Cannabis stock but rather invest in a good portion of all the companies that make up this market. eToro's portfolio uses Shares listed on the US and Canadian Stock Exchanges and includes the following companies:
AbbVie: This pharmaceutical company makes a Cannabis-based drug called Marinol, which treats appetite and weight loss associated with HIV and cancer.
Aphria: Global leader in the cultivation and production of cannabis products for medicinal use, such as Cannabis oil, capsules, vaporizers, and more.
Aurora Cannabis: Canadian company that produces Cannabis flowers, oils, and ground Cannabis, among other related products.
Cara Therapeutics: A biotechnology firm in the clinical phase produces several products for pain relief for chronic patients based on Cannabis.
Corbus Pharmaceuticals: This company develops Lenabasum, a Cannabis-based drug for treating systemic sclerosis, cystic fibrosis, dermatomyositis and systemic lupus erythematosus.
Cronos Group: Canadian organization dedicated to promoting new companies that use Cannabis in various fields.
GW Pharmaceuticals: British firm that received in 2010 the first market authorization for a drug to treat multiple sclerosis based on Cannabis, called Sativex.
Insys Therapeutics: Pharmaceutical company developed synthetic THC products and obtained different authorizations to produce other cannabis derivatives for medicinal use.
Scotts Miracle-Gro Company: New York-listed firm, a leader in producing and supplying seeds of wide varieties for over 150 years. In recent years, the company has invested millions of dollars in acquiring companies for its Cannabis division.
Zynerba Pharmaceuticals: Develops cannabis-based drugs to treat rare diseases and syndromes such as Tourette's and epilepsy.
eToro: Online Broker to invest in Cannabis Assets
As mentioned, the eToro platform is a quick alternative to start investing in Cannabis stocks. On the one hand, it offers a free demo account that allows you to practice with 100,000 virtual US dollars. But, on the other hand, it is not the only option; it is a platform that provides appealing graphic quality and is very easy to use.
Conclusions on Cannabis Investments for Filipinos
Cannabis as an investment opportunity is still in its early stages in the Philippines and may present both risks and opportunities for Filipino investors. On the one hand, the global cannabis market has been snowballing in recent years. It is expected to continue its growth trajectory, driven by increasing legalization and acceptance of medical and recreational use. This could potentially provide significant returns for investors in the sector.
On the other hand, the cannabis industry is highly regulated, and the legal and political environment for cannabis investments can be complex and uncertain in many countries, including the Philippines. There are also concerns about the potential health and social impacts of cannabis use and the risks associated with investing in an emerging and largely untested industry.
For Filipino investors considering investing in the cannabis sector, it is essential to thoroughly research the industry, the companies involved, and the regulatory and legal environment in which they operate. This will help ensure a better understanding of the risks and opportunities and allow investors to make informed investment decisions. Additionally, investors may want to consider seeking the advice of a financial advisor or investment professional to help evaluate the suitability of cannabis investments for their circumstances and investment objectives.
Cannabis is a substance treated in many ways: Illegal, medical, recreational, and even as a significant part of some cultures. In the Investments World, several financial analysts minted this market as "The Green Gold".
This guide explains how to invest in the Cannabis global markets from the Philippines.