Since the legalization of marijuana in certain states, there have been a number of companies to go public. While these companies were once seen as extremely volatile, they have steadied as the number of states and countries that legalize marijuana grows every year. In 2017, the traditional marijuana stocks did not do much for investors, but a few shined beyond belief with returns of over 150%.
The trend for 2017 was to invest in Canada-based marijuana companies. Aurora Cannabis, Emerald Health Therapeutics, and Village Farms all showed massive potential. The stocks blew up over the course of the year, each for a different reason.
Investors in Aurora Cannabis saw an incredible investment in 2017 when the stocks value skyrocketed over 170% from the beginning of the year. Surprisingly, Aurora Cannabis started the year slowly. You might be asking, what turned the year around for the company?
First off, Aurora moved from the TSX Venture Exchange, which serves smaller companies, to the larger TSX. This move was big for the company because it brought more exposure to investors they were not previously reaching. In addition to the bump up on the TSX list, Aurora began supplying medical marijuana to the German market. Aurora started supplying the medical marijuana in September through their subsidiary Pedanios GmbH.
An outside factor that contributed to the surge in stock purchases of Aurora, was the investment of Constellation Brands in Aurora’s competitor’s Canopy Growth. Constellation Brands bought a 9.9% stake in Canopy Growth for $245 million. Investors began to buy any Aurora stock they could get their hands on. The thought was that a large investment in Aurora would come soon.
Aurora attempted to make an acquisition of its own in 2017. The marijuana supply company attempted to purchase the medical marijuana growing firm CanniMed Therapeutics. It has been reported that CanniMed is attempting to stop the acquisition of their company by Aurora.
Emerald Health Therapeutics
Emerald Health Therapeutics was another marijuana stock that outperformed its expectations in 2017. Emerald Health follows the common theme of this article, it’s a Canadian medical marijuana grower. Emerald Health’s stock performed similarly to Aurora over the course of the year. It started slow, then exploded.
In the beginning of 2017, Emerald Health was busy despite the lack of investor attention. The company spent time raising money through public offerings, launched a new cannabidiol (CBD) product line, and even expanded its cannabis supply by partnering with Supreme Pharmaceuticals.
Just as Aurora, the interest for investors in Emerald Health began to catch some steam after the Canopy Growth-Constellation Beverage deal. Investors began to buy up the stock with the feeling that a big deal involving Emerald Health was coming. This factor in conjunction with the Canadian government setting parameters for the legalization of marijuana in November created a massive surge in the second half of 2017.
Village Farms takes the cake in terms of return on investment. The share price has soared passed 450% this year. The most surprising part about this stock is that it did not start the years as a marijuana stock!
Village Farms was a low-end greenhouse fruit and vegetable grower. The Canadian company was struggling to rise through the ranks. In 2017, Village Farms partnered with Emerald Health to grow medical marijuana. The deal outlined how Village arms would allow Emerald Health to convert 25 acres of one of its greenhouse facilities to a grow marijuana for medical purposes. This deal made sense for both sides. It benefits Village Farms because they are entering an expanding business area. It benefits Emerald Health because they are now projected to become lowest-cost marijuana producer in Canada.
What’s In Store for 2018?
It makes sense that these three companies can sustain positive growth throughout 2018. While they may not return over 150%, all signs point to growth. The legalization of the recreational use of marijuana in Canada will only lead to an increased revenue for these companies.