(Agriculture and technology are two ways to indirectly invest in cannabis)
As any industry grows, it is lifted by and slowly gets entangled with other sectors. The cannabis industry has quickly blossomed over the span of just a few years, and as it has become more established, cannabis opportunities have expanded far beyond the plant.
That’s why many cannabis experts and investing gurus are looking at opportunities
around cannabis. One of the biggest names in the industry, Bruce Linton, told Stockhouse back in August that the big market of ancillary services
looks like the next big cannabis play.
But even within ancillary services (providers of necessary support) are
many different opportunities for investors to consider. Some believe that any business not directly involved in plant growth qualifies as an ancillary service, but it’s the completely “non-plant-touching” companies that have the most value.
Those ancillary companies get to ride the highs of the cannabis market without being reliant on it for business. A natural fit is a company that operates in the agriculture sector and can support the industry with growing equipment and hydroponics. Examples include gardening giant
The Scotts Miracle-Gro Co. (
NYSE:SMG),
GrowGeneration Corp. (
OTC:GRWG), and
CleanSpark Inc. (
OTC:CLSK) which provides energy and power grid systems.
Like the alcohol industry before it, the cannabis industry also has room for packaging, branding, and even equipment specialists. The former includes
KushCo Holdings Inc. (
OTC:KSHB) and even
Constellation Brands Inc. (
NYSE:STZ) with the alcohol giant’s investment in
Canopy Growth Corp. (
TSX:WEED), while the latter sees companies like
Xtraction Services Holdings Corp. (
CSE:XS) and
Nextleaf Solutions Ltd. (
CSE:OILS) provide specialized cannabinoid extraction equipment.
Perhaps the most-removed play for investors looking at cannabis is in technology. The new industry needs a lot of tailored systems and software that, while specific to cannabis, can be tweaked and used in other industries as well. Companies like
EnWave Corp. (
TSX-V:ENW) and
Helix TCS Inc. (
OTC:HLIX) are some tech providers for the industry, and
Lift & Co. Corp. (
TSX-V:LIFT) is a well-known entry into cannabis media.
There are many more ancillary plays to be made in cannabis than just those listed above. Healthcare and drug manufacturing look more enticing with each development or study that gets released (and will ramp up alongside the industry nicely), and companies are also making headways in real estate specifically targeted at cannabis companies.
Investors should look at the many available options and, like the experts, find a few that look strong in varying market conditions. It’s not a question of whether the cannabis industry will continue to grow, but with the US Congress
recently passing legislation that makes it easier for businesses to work alongside cannabis, that growth isn’t limited to one vertical.
FULL DISCLOSURE: Xtraction Services Holdings Corp. and Nextleaf Solutions Ltd. are clients of Stockhouse Publishing.