Are pot stocks a good investment?

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Are pot stocks a good investment?

 Are pot stocks a good investment?
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Summary

  • Cannabis has therapeutic and other demands, and there are abundant opportunities available for companies operating in this market.
  • The Australian cannabis sector has seen a few boosters from the government in the past, and increasing legalisation for adult use is a crucial growth factor for this sector.
  • Many companies from this sector have listed on the ASX, and the scope for growth is enormous for this budding sector.

The medicinal cannabis industry is vast. Several nations have been legalising the use of cannabis for either medicinal or recreational purposes. As a result, the pot sector sees more and more companies establishing themselves in the supply chain, packaging, software, and other related aspects. There is a lot of opportunity for companies who wish to innovate with technological research solutions, provide leased land for cultivation and drive legal permissions. Key factors supporting growth are the increasing legalisation for adult use and the high consumption rate in various countries.

Investors in this sector are driven by discoveries that cater to patients who don’t have other treatment options. Therefore, they want to not just invest in producer companies but also in ancillary businesses. As companies have slowly begun listing, trading and even exporting, investors worldwide are eagerly eyeing this budding sector.

Also Read: Is Cannabis Space Offering a Lucrative Investment Opportunity Amid Coronavirus Outbreak?

How is Australia’s pot sector placed?

Australian legal cannabis market also includes marijuana and hemp oil. Australia legalised medical marijuana at a federal level in 2016. In 2019, the Australian capital Canberra became the country’s first city to legalise possession and cultivation of marijuana for adult use.  At the end of 2020, the TGA (Therapeutic Goods Administration) made a landmark decision for this industry. It reclassified products that contain low-dose CBD and allowed its sale over the counter in Australian pharmacies, even without a prescription. It was a significant validation for the sector to tap new consumers.

The Australian medicinal cannabis cohort was initially founded with companies catering to patient care. However, now the sector encompasses a range of businesses. Firms are involved in the manufacturing, distribution and even export of cannabis products. A lot of R&D-focused bio-techs are also hopefully diversifying into this sector. Many of the companies have even listed on the ASX. They have started applying for cultivation licenses and are backed by deep-pocketed investors.

DO READ: All you need to know about Australia’s burgeoning medicinal cannabis industry

Why are investors looking for ‘pot’ luck?

With more ASX listed companies expanding in this sector, the sector is gaining traction from retail investors. As a result, investors see long-term and short term chances to buy in and out of these stocks.

Increasing partnerships between cultivators and biotech companies for drug development and research is anticipated to drive growth.

Even international corporations are investing in Australian companies to strengthen their market positioning. As a result, investors see substantial commercialisation opportunities in this sector.

Which are the leading cannabis stocks on ASX?

As medicinal cannabis has been legalised in Australia, investors must avail advantage of it. The sector is sharp surging, and growth potential is tremendous. Few prominent names on the ASX that are attracting investors to this sector are –

There are a few other popular names as well, like, Zeliria Therapeutics Limited (ASX:ZLD), IDT Australia Limited (ASX:IDT), Little Greens Pharma (ASX:LGP), who also operate in this sector.

For more details read: 15 ASX cannabis stocks to look at in 2021

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