The cannabis industry is experiencing impressive growth, and companies like World High Life Plc. (NEX: LIFE) are surfing the wave
Billions of dollars are flowing into the cannabis market as its legalization opens up new opportunities for investors.
The social acceptance of marijuana is growing year by year. It has already been legally approved for recreational use in Canada, Georgia, South Africa and Uruguay, as well as in the 11 states in the USA. In September, the capital city of Sydney was the first in Australia to join the list.
Other countries, such as the Netherlands and Spain, allow limited trade of hemp products. Patients using medical marijuana have even wider possibilities – using it is legal in more than 20 countries in various parts of the world. The transition of cannabis growers and cannabis processing industries to the legal zone creates new opportunities – not only for cannabis users, but also for investors who would like to make money on the development of this new sector.
That’s why billions of dollars from investors go to the medical and recreational marijuana market. Tobacco and beverage giants are followed by individual investors. Are we already witnessing ‘green fever’? Is engaging with hemp companies a rational investment decision?
“This is not yet a green fever, but you have to be selective and cautious when investing,” says Łukasz Wardyn, director of CMC Markets for Eastern Europe, in an interview with MarketNews24. “It is not worth investing in every company, because let’s remember that when prohibition was lifted in the USA, not all hop producers benefited from it and had fantastic results.”
We do not know much about the numerous listed companies in the cannabis sector. And not every one of them will have excellent financial results. For example, in Colorado, USA, which has a population of 5 million, there are over 1.4 thousand licenses registered for the cultivation and production of cannabis. And there are states in which only a few licenses have been issued. According to Łukasz Wardyn, it is better to invest in shares of those companies that operate in a place where there are fewer licenses, because they have less competition.
However, the North American cannabis market is the most dynamic in the global cannabis sector. Canada’s slower-than-expected uptake is largely compensated by the fast-growing cannabis industry in the US.
Even though still lagging behind the North America, Europe is slowly taking up speed in becoming one of the biggest cannabis and CBD consumer markets in the world. European companies are already realizing it. For example, an investment company World High Life PLC (NEX: LIFE)is aiming to become the world’s leading CBD and medicinal cannabis player. Their management team is experienced in Canadian cannabis market, but plans to transfer their know-how overseas. They recently acquired UK’s leading CBD producer Love Hemp, as part of the plan to build a portfolio of the most promising UK and European companies.
Medicinal cannabis and CBD market in the UK and Europe is expected to reach 58 billion euro by 2029, and companies like World High Life PLC are set to dominate it.
Investors should also consider other solutions than buying shares or taking positions in CFDs for specific companies, such as engaging in basket investment products that diversify risk. “Different types of stock indices are created to aggregate the quotes of such companies or ETFs. The spectrum of available financial instruments is large, so the funds flow to this market. From 2017 to 2018, the number of investments increased fourfold”, adds CMC Markets expert.