“The global cannabis market is no doubt an exciting one, and there are many companies auditioning for your investment dollars. Cannabis stocks range from penny stocks to multi-billion-dollar global companies, so there’s quite a lot to choose from when thinking about how to play the space.
Two companies on opposite ends of the cannabis spectrum are Canopy Growth Company (NYSE: CGC) and Medical Marijuana, Inc. (NASDAQOTH: MJNA). Canopy, based in Canada, is the largest cannabis company in the world by market capitalization, and has Constellation Brands (NYSE: STZ), the owner of beer brands such as Corona and Modelo, as its largest strategic investor. Constellation invested $4 billion in Canopy last August for a 38% stake, along with warrants that give it the option to potentially purchase a controlling stake in the company.
Meanwhile, Medical Marijuana is a very small stock that trades over-the-counter in the United States at a market capitalization of just $200 million. Unlike Canopy, which focuses on medical and recreational marijuana sales in non-U.S. countries where cannabis has been legalized, Medical Marijuana decided to focus on the cannabidiol (CBD) market in the U.S. Though THC products, which contain the psychoactive agent in cannabis, remain federally illegal, the 2018 Farm Bill, passed in December, legalized the cultivation of hemp in order to produce CBD without THC, the psychoactive agent in cannabis. Medical Marijuana did have about $20 million in sales last quarter, which means there is a real potential business there.
Comparing operating results
Canopy currently generates much more revenue than Medical Marijuana, but it’s not as much as you might think. Last quarter Canopy made just over CA$106 million in revenue, more than 400% growth over the prior-year quarter, while Medical Marijuana made just over $20 million in revenue, nearly double the amount in the prior-year quarter.
Canopy is certainly larger and growing faster than Medical Marijuana, but considering Canopy’s stock is valued at roughly 68 times that of Medical Marijuana’s it’s not a stretch to think the scrappy upstart could be the better bet.
Compare that with Canopy, which posted a staggering CA$335 million net loss just last quarter, and a loss of CA$670 million for the year. The losses were due to Canopy’s heavy spending on expansion in Canada and 15 countries around the world. Even after the end of the last quarter Canopy continued its spending spree, buying Germany’s C3 Cannabinoid Compound Company, the UK’s This Works Products, a CBD company, then paying $300 million for the right to purchase Acreage Holdings (NASDAQOTH: ACRGF) for $3.4 billion should the U.S. legalize cannabis at the federal level.
Read the full article at Yahoo Finance