By / March 11, 2020

Cannabis on the stock exchange

Cannabis is a versatile commodity. Even if one normally only thinks of its function as a drug, this is by far not the only one. Marijuana can also be used medically, as it has analgesic and anti-inflammatory properties. Even as useful hemp it proves to be very useful in industry. Among other things, textiles can be made from hemp, paper can be produced and numerous chemical products can be manufactured. Along with the increased legalizations, the industry booms around cannabis. This trend has also made waves in Germany. At this point, here is an investigation on how you can earn money with Hemp on the stock exchange.

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The German Hemp Fund

All stocks around cannabis have proven to be volatile. Nevertheless, a large part of them can be called real price rockets. With the complete legalization in Canada, for example, a company called Tilray has taken off. This company has gained a whopping 850% in value since its IPO, although this value has now fallen by half.

This incredible volatility represents a high risk for the investor. This is why the Hamburg-based company Werkshausen & Stehr Hanf Consulting has sought an actively managed equity fund focusing on the cannabis industry. This fund replicates the entire value chain of cannabis. It includes cultivation, licenses, research, technology, distribution, and pharmaceuticals.

The investors place their money in around 35 of the leading companies in the North American market. Through broad diversification, the risk of the cannabis industry is to be mitigated, but the generally outstanding growth is to continue. However, the specialization of this fund is very limited. Even if the diversification within the industry is broadly diversified, there is a risk that should not be underestimated due to the inevitably small niche.

The largest cannabis companies on the stock exchange

Without prohibition, industrial hemp experiences a deserved renaissance worldwide. Investors can place money to 35 of the leading companies on the North American market. (Source)

Those who prefer more adrenaline and want a lot of return instead of security should invest in individual companies. The largest cannabis company on the stock exchange is called Canopy Growth. With a market value of $5,5 billion, this company is the true giant in the industry. As expected it comes from Canada. Through the acquisition of the company Spektrum Cannabis, it is also invested in the German market. This company was the first to have an import license to Germany for Canadian cannabis, which is imported for medical purposes. It may also be interesting to note that the brand behind the beer Corona has secured almost 40% of this marijuana producer.

The second largest but probably best-known company is called Aurora Cannabis with a market value of about $3 billion. Of course, this company also has its origins in Canada. It is interesting that there are broad expansion plans for foreign countries. So if more legalizations occur, this company will become active locally.

In general, it should be noted that trade with companies in the cannabis industry is unpredictable. Cannabis as such is currently experiencing a renaissance and the consequences of this are unmanageable. Therefore, one should really be familiar with this topic before investing in individual companies. If someone is interested in seeing a part of portfolio in the hemp industry out of conviction, it is better to realize it in a comparatively risk-free fund.


(Featured image by Rick Tap via Unsplash)

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First published in Hanf Magazin, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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