Editor’s Note: This story was previously published in February, 2019. It has since been updated and republished.
The 2018 midterm elections made clear that Americans preferred legalization over the continued prohibition of pot, which should bolster the case for the top marijuana penny stocks.
When residents in California voted for full recreational weed, it boded well not just for marijuana penny stocks, but for electoral momentum in other states and the midterms emphatically proved this point.
In conservative Utah and Missouri, voters approved medical cannabis. But Michigan stood above the rest, becoming the tenth state to legalize recreational marijuana. Significantly, it’s also the first Midwestern state to approve such an initiative.
Previously embattled marijuana stocks like Cronos Group (NASDAQ:CRON), Tilray (NASDAQ:TLRY), and Canopy Growth (NYSE:CGC) received a much-needed boost in the markets and really have capitalized on it.
Recent booms in these stocks make it easy to see why. Not only does legal marijuana open doors to a previously inaccessible sector, it has proven economic benefits.
The commonly-cited case study is Colorado. In 2015, one year after green lighting cannabis businesses, the botanical industry nearly hit $1 billion in revenue.
In 2016, it breached the threshold, and growth remains strong. Considering that so many states suffer from budget shortfalls, a little green could go a long way.
Under this backdrop, gambling on top marijuana penny stocks is more compelling than jumping on any other speculative venture. While risks abound, these four sector players offer considerable upside possibilities.
Auxly Cannabis Group (CBWTF)
A common difficulty in forecasting future price movements for top marijuana penny stocks is separating hype from reality. While almost every sector player advertises significant upside potential, most undercapitalized firms fail to deliver the goods.
I had high hopes for Auxly Cannabis (OTCMKTS:CBWTF) last year due to its unique business structure. Auxly earned bragging rights for becoming the first cannabis streaming company.
Energy and mining companies typically deploy the streaming model to gain full access to an industry’s supply chain without incurring unnecessary risk.
In theory, streaming is the way to go for marijuana-related organizations. Even with Canada’s legalization initiative and U.S. electoral momentum, several legal and administrative hurdles exist. Streaming facilitates exposure to a lucrative industry, but with “stop gaps” should things go awry.
Unfortunately, the markets have not been kind to Auxly stock. Since its January opener, shares have lost more than half their equity value.
Nevertheless, I’m still hopeful that Auxly can pull it together. Legal marijuana really still is in its infancy so we should expect growing pains. Moreover, CBWTF has settled into its long-range support line around 65 cents. It’s a hefty risk, but a worthwhile one with gambling money.
MPX Bioceutical (MPXEF)
A common stereotype about legal-cannabis advocates is that they have ulterior motives for their product evangelism. Although that could be the case, one thing is undeniable: many, if not most top marijuana penny stocks focus on botany’s medicinal aspect.
The former two divisions specialize in medical-grade cannabis, while the latter caters to the green lifestyle. Salus is particularly intriguing as it represents a joint venture with Israeli pharmaceutical Panaxia to develop proprietary, smokeless cannabis products.
Another compelling driver for MPXEF stock is its technical momentum, as it lacks the extreme volatility seen in other sector-related speculative companies.
That’s not to say you should jump on MPXEF stock without worries. The company isn’t what you would consider fundamentally sound. Still, with relatively-stable market performance and an impressive growth rate, speculators will want to keep close tabs on MPX.
Supreme Cannabis Company (SPRWF)
When Canada became the first G7 nation to approve recreational weed in October 2018, it actually forged the path forward for marijuana startups. As a result, the lion’s share of marijuana penny stocks are based in Canada.
A prime example is Supreme Cannabis Company (OTCMKTS:SPRWF). Supreme Cannabis, whose 7ACRES brand of medical-grade cannabis started life as a father seeking alternative therapies for his daughter.
Eventually, 7ACRES grew to become a gold-standard cannabis facility, offering distinct, high-quality strains.
What makes SPRWF stand out compared to other top marijuana penny stocks is that management is focused on a business-to-business (B2B) strategy. This enables the company to fine-tune its craft, rather than dilute its effectiveness through disparate supply-chain segments.
Last year the markets acknowledged Supreme Cannabis’ potential, but the ride was anything but smooth. SPRWF stock doubled in value between mid-August through September-end. However, it crashed back down to earth by mid-October, 2018.
Since then, SPRWF stock has managed to hold onto long-term support above $1 and is up around $1.65 today. It’s a high-risk, high-reward venture, but a very tempting one.
Cannabis Science (CBIS)
Cannabis Science (OTCMKTS:CBIS) is easily one of the most speculative among top marijuana penny stocks. Immediately, you can tell that through either its ridiculously-low share price, or its sub-$100 million market capitalization.
Another giveaway is Cannabis Science’s bold declaration to provide innovative therapies for unmet medical needs, including cancer. As the old saying goes, extraordinary claims require extraordinary evidence.
But this is also where CBIS stock becomes interesting. Management claims that cannabis use dates back thousands of years, making it one of the most tried-and-true medicines. Plus, traditional pharmaceutical companies have become more a marketing machine than a therapy provider. Therefore, the medical-cannabis industry deserves at least some credibility.
That’s the good news for CBIS stock. The not so great news is that shares continue to struggle.
Conservative investors should probably stay away from Cannabis Science and marijuana penny stocks in general. But the encouraging note is that CBIS stock has stabilized since before the beginning of the year. That’s no guarantee of a turnaround, but any positive movements are likely to be explosive.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.