RE:RE:TheStreet #CramerTeachIn is sold outFrom Jeff's today session:
https://www.thestreet.com/jim-cramer/jim-cramer-teach-in-kicks-off-live-blog-14743757 Debra Borchardt, founder of Green Market Report, Hosts a Panel on Cannabis Companies
The industry is set to grow enormously according to the panelists.
When cannabis companies are public, there's visibility and liquidity in buying the stock. Investors should understand the management team's approach.
"This is a developing asset class," another one of the advisors said. But "corporate governance is critical."
Borchardt pointed out that many cannabis stock investors focus on which companies have brands strength, hanging their hats on the idea that brand strength will see cannabis companies through.
Here's another key element to consider when picking cannabis stock: science and product type. How do consumers know what's actually in the product and where the ingredients came from? The companies that make those things clear will have some advantage over others with consumers.
One of the advisors says that a lot of investors are investing broadly in the cannabis industry, rather than keying in on which companies are best. Different geographies have different regulations, which sometimes put restrictions on revenue growth, he said. Plus, some companies, due to differing costs in different geographies, have different gross margins from another company.
Also, getting onto the shelves are of a larger retailer will require having the right disclosures on products. Walmart (WMT - Get Report) said it wants to sell cannabis products in some of its Canada stores, so watch out for which companies are able to get onto Walmart's shelves.
The beverage product category may also emerge as a lucrative part of the cannabis business, as many vendors say they're keeping their eye on consumer demand for cannabis beverage products.
Here are some more keys to understanding the industry, and which individual stocks to buy:
Scale and branding are important.
"This is a $70 billion industry and nobody has 1%" market share, said a CEO. That's very rare for a industry, which means that it's likely that a few players will emerge as dominant. Investors should look out for those payers.