The Best Marijuana Stocks to Watch in 2019

The best pot stocks for 2019 – Half year update

Here we are, just over halfway through the year, and the landscape looks bleak and dismal. Some people have said that the pot stock sector's gold rush is over, while others have claimed the "told you so" mentality against some of the best marijuana stocks in the game, and many more are fleeing for the hills over the latest CannTrust debacle.

Don't waste your time with explanations. People hear what they want to hear.– Paulo Coelho

But the cannabis industry's run has only just begun. The four largest economies in the world have yet to legalise medicinal cannabis at the federal level, and the US market is growing day by day, with full legalisation looming large over the landscape now.

We believe the second half of 2019 holds great promise for the industry, and hence here's what you want to hear if you want to hear it. The 5 best marijuana stocks, we think could perform very well in the second half of 2019.

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: Past performance is not an indicator of future performance.

MedMen – US MSO

Some love them, some hate them. Love 'em or hate 'em, here are the facts. They are the most recognisable cannabis brand in the US. They generate more revenue per square metre of retail than Apple does. In fact, they are known in the industry as the "Apple of Weed" as their stores are cutting edge, with a premium fit out and customer experience.

They boast over 84 potential retail store licenses that would cover over half the American population. They have recorded over 2 million transactions to date and with their recent acquisition of PharmaCann, they are one of the biggest Multi-State Operators (MSOs) in the game.

MedMen Cannabis Industry
Source: MedMen

They have had a shocker first half of the year, and there were some very valid reasons for this. They burn…a lot. MedMen is one of the most aggressive when it comes to expansion, and this translates to a very high cash burn – the largest in the US industry (only Canopy and Aurora burnt more, and they are expanding globally).

They have lagged the rest of their peers for the entire first half of 2019, but have recently renegotiated (and increased) their investment from Gotham Green (one of the smartest investment houses in the cannabis game), and combined with the new CFO's commitment to decreasing costs, we feel they are very well placed for growth.

Cash flow issues are (for the moment) behind them, and when they close the PharmaCann deal, they will see significant growth in both revenue and reach. It's only half time, and with a pep-talk from the CFO, the backing of the sponsors (in Gotham Green), and growth in Florida and the newly legalised State of Illinois, we think MedMen could have a game-changing second half, and storm the best marijuana stocks leaderboard.

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: Past performance is not an indicator of future performance.

Valens GroWorks – Canadian Extraction

You would have to have been living under a rock for the past couple of months if you did not know how hot we are on the extraction sector. Why? Because the demand for extracts and edibles is growing faster than the entire sector itself (which oh, by the way, is the fastest growing industry on the planet).

The rise of the extraction "giants" in Canada has been immense, and Valens GroWorks has been at the forefront of that. The company boasts billion-dollar clients such as Canopy Growth, Tilray, TGOD, Hexo, and Organigram, and have an extraction capacity of over 240,000 kilograms/year. That's huge!

Valens GroWorks best marijuana stocks 2019 best pot stocks to invest for 2019
Source: Valens GroWorks

Without a doubt, cannabis extracts will become increasingly important in the Canadian cannabis market, given that edibles and extracts are by far the most in-demand form factor in mature markets such as Colorado, Washington, and even California.

Their recent financial earnings report for Q2 2019 was outstanding. They posted revenues of $8.8 million, a whopping 296% increase over the first quarter of 2019, with gross profit margins of just over 58%, compared to 38% in the previous quarter.

Growing sales and market share in an ever-growing sector of the market makes the extraction companies a no-brainer for at least the coming 12 months, and Valens is a probable podium finisher in our opinion.

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: Past performance is not an indicator of future performance.

Organigram – Canadian Licensed Producer

These guys are simply known as the "executioners" and for very good reason. Right now, they are probably the finest LP in the game.

Organigram is a producer of premium grade cannabis flower that has taken the recreational market by storm. Winners of multiple awards, their brands and strains are, consistently, rated very highly online. And they are also the market leader in the 'pre-rolls", with the production of over 2.5 million of them from October 18, 2018, to date.

They boast supply agreements with all 11 Provinces, giving them 100% coverage of the adult recreational use market in Canada. Importantly, they are preparing for the onrushing extracts boom set to open up from October later this year. And it's the vape pen market that is set to gain the lion's share of the consumer spend.

Innovative partnerships with exceptional companies like PAX mean our own product offering grows and our customers have access to cutting-edge technology and cannabis experiences.– Greg Engel, Organigram CEO

Recently, the Company announced their partnership with PAX Era, the premium closed-loop vaporiser solution created by PAX Labs. PAX, who many consider being the leading brand in the vape pen market, specialises in the design and development of premium vaporisers, which in turn, are associated with premium strains and consumer spending (as PAX is not cheap).

Performance-wise, Organigram has been one of the best marijuana stock of 2019, and we expect Organigram to continue to deliver in the latter stages of the year and to be front and centre when the edibles and extracts performance begins.

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: Past performance is not an indicator of future performance.

Botanix Pharma – Global Biotech

Although Botanix Pharma is listed on the Australian Stock Exchange, it is primarily a US-focussed, cannabis biotech that we think could really punch the lights out. The company focusses on the use of synthetic CBD (which we have regularly written about) with a patented, proprietary delivery mechanism for the treatment of inflammation-based skin diseases.

We're talking about Acne, Atopic Dermatitis (eczema) and psoriasis, which combined offer Botanix a total addressable market worth north of US$8 billion. The company has four assets in the drug pipeline, with the acne and atopic dermatitis Phase II trials completing in Q3 and Q4 respectively. Oh, and they just brought on a President, who sold his last acne drug to Pfizer for a cool $5 billion. As a result, the big drug companies are now watching…closely.

Download the Executive Summary now

A successful endpoint on either of these trials could mean $1 billion in revenue over the coming 10 years (and that's just one drug). The premise behind all of the treatment options is that CBD is very effective as an anti-inflammatory treatment mechanism, and has anti-microbial properties (meaning bacteria are killed rather than becoming antibiotic-resistant). The combination of the two means that their topical creams are showing the same treatment results as the incumbent drugs, but…with no side effects.

If both treatments offered the same results, would you rather your teenager suffer blistered, dry skin and suicidal thoughts, or…none of that? No brainer, right? Watch for big results from the company as the year winds down, and big upside movement in the stock price if the news is positive. This company deserves to be one of the best marijuana stocks of 2019.  Expect more to come.

Disclaimer: Past performance is not an indicator of future performance.

Disclaimer: Past performance is not an indicator of future performance.

Alcanna – Canadian Retail

Our list could not be complete without adding a Canadian retailer to it. As has been discussed (at length) above, although the Canadian recreational retail market has been slow out of the blocks, with the oncoming Legalisation 2.0 around the corner, retail is set to get a whole lot better.

Alcanna (a combination of alcohol and cannabis), with revenues in excess of $600 million, and processing over 20 million retail transactions of beverage alcohol per annum, know how to operate retail in a highly regulated industry.

They also currently operate 236 bottle stores across three retail types, being large-format mega stores, convenience retail brand, and discount stores. They are tried and tested in this area and made the decision to diversify and capitalise on cannabis retail, by operating their chain of Nova Cannabis stores across Canada.

Nova Cannabis Alcanna Best marijuana stocks best pot stocks to invest for 2019
Source: Alcanna

The company is extremely well cashed up, with over $60 million in cold hard cash sitting on their balance sheet. They aim to open nearly 100 cannabis stores across Alberta and Ontario over the coming 24 months, and have an additional war chest in the form of a (currently unused) credit facility of $50 million.

We believe this to be one of the best marijuana stocks, as essentially, you are getting two businesses in one. There is a significant alcohol business, that under new management and direction has seen quarter-on-quarter growth for the past 3 quarters, and a booming cannabis retail chain that is only growing stronger as the Canadian recreational market opens up and matures.

With legalisation of edibles and extracts in October, and both Alberta and Ontario recommencing the license allocation process, we believe this to be one of the best ways to play cannabis retail.

And there you have it

Our calculated, and most educated guess, on who the winners could be as we move towards the end of 2019 and into 2020. Although there are no guarantees in this game, and no selection should ever be made without doing your own research, we believe this to be a great place to start it. Will the companies on this list live up to their promise of being one of the best marijuana stocks of 2019? Time will tell.

"Every beginning is only a sequel, after all, and the book of events is always open halfway through."– Wislawa Szymborska

This could be one of the best investing opportunities of 2020

Legislative changes are blowing through the US, and with it, an ever-increasing number of states legalising cannabis for recreational use.

With the success seen in Illinois, which legalised for adult-use on January 1 and saw products moving off the shelf at an unprecedented rate, this company is primed to take advantage of the booming US recreational market.

They have secured partnerships with the biggest cannabis companies in the US, and their portfolio is second to none.

And with the sector-wide pullback of 2019, this company is now at a bargain-basement price.

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Mark Bernberg
Mark Bernberg

Mark Bernberg is a long-time cannabis investing enthusiast and founder of The Green Fund, Asia Pacific's preeminent media house, positioned at the forefront of the global cannabis industry.

There are 8 Commentsin this post

    1. That was a long time back and related to the CEO who was subsequently removed and the SEC case closed via settlement. We do not believe this will have any impact moving forward.

  1. CannTrust management is completely dishonest and lucky that they aren't being prosecuted and their license taken away for secretly growing product outside of their premises. How can you possibly recommend this dog???

    1. James – you raise a very valid point. We picked these stock in January when, to be frank, CannTrust was believed – by nearly every analyst in the industry – to be one of the best ways to play the Canadian medicinal market. We agree completely that management have been either fraudulent or grossly incompetent, and are publishing a new list today, in order to rectify this. Thank you for the comment, and as previously said, you're on the money.

  2. Hi I'm really keen to get some shares in the Cannabis industry. We live in Australia can someone please make contact to discuss.

  3. why does it seem that so many of these pot stocks are hitting some very low numbers? Is there some kind of over production? No doubt a time to invest if…. they rise again

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