Cannabis-heavy stock portfolios are becoming as hot a topic as tech startups were the late 1990s. But Viridian Cannabis Stock Index seems to have the sunniest outlook, indicating a growth of 236 percent in 2016. That includes an almost 31 percent increase in the third quarter and 155 percent in the fourth quarter.
The one marijuana business listed on the New York Stock Exchange is called Innovative Industrial Properties; you may have heard of them because of their IPO in November. Although they are the only publicly traded marijuana industry stock on the NYSE, Innovative Industrial Properties is not really in the production or sales of pot. They are a Real Estate Investment Trust company that rents commercial properties out to the people who do the growth and storing of America’s fastest growing cash crop. After opening at 19.75 per share, the stock (listed as IIPR) dropped to 15.29 by December 5 and then climbed back to 18.14 on February 3, 2017.
The Cannabis Stock Index
Meanwhile, on the Over-the-Counter Market, Viridian Capital Advisors developed the Cannabis Stock Index, to keep tabs on 50 publicly traded legal marijuana companies starting in 2016. The index is categorized by the 12 different product/technology sectors that comprise the businesses that “touch the plant” and other core businesses of the legal cannabis industry that don’t. They include:
- Agriculture technology
- Biotech/pharma
- Consulting services
- Consumption devices
- Cultivation & retail
- Hemp
- Investments/M&A (holding companies)
- Infused products & extracts
- Miscellaneous ancillary
- Physical security
- Real estate
- Software/media
How does a business make it into the Cannabis Stock Index? They must meet the following criteria:
- A $10 million market capitalization
- An average daily trading volume of at least $20,000
- A float (outstanding shares) of at least 25 percent
- Financial reports filed on time for at least the last six months
The index is not yet tradable, though they are looking at future opportunities to convert it into a tradable entity. Still, it does offer insight into how marijuana investors are doing at a time when potential investors are taking a keen interest in Viridian’s weekly index status report on the state of the index. The Cannabis Index rose in a big way in the second half of last year, not surprising as legalization brought the US closer to full legalization.
Photo credit: Heath Korvola | Getty Images
