Top tips for investing in ASX-listed cannabis stocks
Medicinal cannabis offers real investment opportunities for investors who can see past green fever, says expert Adam Miller of medical cannabis accelerator BuddingTech.
Is medicinal cannabis a long-term industry or just the latest stockmarket trend?
There is certainly merit to the benefits of medicinal cannabis. It is going to break the medical paradigm and is predicted to be worth more than $55 billion. As more research comes out, so too does value of medical cannabis will increase.
In Australia companies are setting up in anticipation for oncology and chronic pain treatments to open up and that is just initially.
But while there are big things to come I do also see that there are lot of people with green fever who are just seeing the dollar signs. Companies have approached us that just want to grow cannabis without knowledge of the industry or anything to do with pharmaceuticals.
Which cannabis stocks are poised to make the most of the boom?
Diversified portfolios are the key for revenue generation. While most companies are interested in clinical research they need to have another revenue strategy.
Companies like MGC Pharma (ASX:MXC) are moving into derma products and have their entire product pipeline controlled from research through cultivation and distribution.
As well, AusCann (ASX:AC8) have taken control of their supply chain through their partnerships. They have a strong collaborative relationship in Chile and Canada and with Zelda Therapeutics.
The key things to look for in a solid investment opportunity is who are the groups that are most leveraged with their collaborative relationships or who has built the supply chain out for themselves. Experience is also key, making sure their is an experienced management team that understand the industry is very important.
How soon will shareholders see a return on cannabis investments?
Generally speaking, cannabis is an option for future investment purposes.
The pharmaceutical path is where companies are going to have the most ROI potential – the market opportunities are in the billions of dollars. Traditional medicines can be complemented or completely replaced by medicinal cannabis to the point that the medical system as we know it today will not be the same.
How are Australian companies positioned for the cannabis market?
There is no point comparing Australia’s path to regulation to any other international government. We have gone done a very different path to other markets by tackling legislation first and patient access second.
At the end of the day, Australia is a conservative nation and we have done everything by the book, first creating a legal framework and establishing an industry that will support national and international distribution.
In the scheme of things, the process of regulation has taken only two years so you could say it has moved quite quickly.
What are the biggest hurdles in the medicinal cannabis market?
There has been slow movement in introducing education to ensure that doctors and specialists are willing to prescribe medical cannabis. There are not many initiatives available by government to support cannabis use for medical professionals.
Additionally doctors and specialists want more clinical research which can take years. It is a sensitive topic because people’s lives are at stake while we wait for comprehensive research. I anticipate that in the coming year or so we will see a loosening of bureaucratic red tape on certain ways that cannabis can be accessed and that will have implications for the market.
What should investors look out for in identifying pot stocks with true value?
Make sure the group you’re backing has a history of working with cannabis or pharmaceutical medicines – that’s the Board of directors, advisory board and the wider team.
Look at their history and what they bring to the company and if they have no experience, their justification for why they think they can make it work.
Adam Miller is the founder of BuddingTech and The Medical Cannabis Council.
BuddingTech is a medical cannabis accelerator that identifies and commercialises projects for the Australian medical cannabis pharmaceutical industry.
Adam studies Business Entrepreneurship at Royal Melbourne Institute of Technology and Sweden’s Jönköping University for international business. In 2016 Adam published two Australian industry White Papers with MGC Pharmaceuticals & The University of Sydney on medical cannabis.