Investment opportunities exist across the cannabis sector. Pic via Getty Images
Health & Biotech
The cannabis industry is currently drawing substantial interest, driven by expectations of significant growth in the coming years.
This coincides with recent moves by the U.S. Drug Enforcement Administration (DEA) to consider reclassifying marijuana from “Schedule I,” its current classification for highly regulated substances, to the less restrictive “Schedule III” category.
“Reducing the schedule to schedule 3 will open up the door for us to be able to conduct research with human subjects with cannabis,” said Susan Ferguson of Washington’s Addictions, Drug & Alcohol Institute.
Read more on that later: It’s showtime! Cannabis could come back from the dead as US makes biggest move in 50 years
In practical terms however, there have been no changes yet.
The proposal still needs to be reviewed by the White House Office of Management and Budget. Following this, it will enter a public-comment phase and undergo evaluation by an administrative judge, which could be a lengthy process.
However, these regulatory adjustments may present opportunities for cannabis investors looking to capitalise on the evolving landscape.
So here’s a quick overview of the cannabis industry, including its different sub-sectors along with an outline of potential risks.
Since Uruguay legalised recreational cannabis in 2013, the industry has experienced rapid expansion.
Canada followed suit in 2018, becoming the second country to fully legalise cannabis.
Subsequently, countries such as Germany, Georgia, Malta, South Africa, and Mexico have also legalised it.
In the United States, as of today, cannabis is legal for medicinal use in 38 out of 50 states and for recreational use in 24 states.
However, despite recent price declines, many cannabis stocks remain costly, reflecting high future expectations.
“As with any sector, there is always a risk it will not grow as expected, so it’s important to learn as much as possible about the industry if you are considering investing in it,” said a note out of Saxo Markets.
Exploring investment opportunities in the cannabis industry requires understanding its diverse sub-sectors, as each offers unique growth potential and investment prospects:
Growers and retailers
At the core of the cannabis industry are the growers and retailers, essential for its existence.
These companies are responsible for cultivating cannabis plants and distributing cannabis products to consumers.
Growers manage the cultivation process, which includes planting, nurturing, harvesting, and processing cannabis plants to produce various cannabis products.
Retailers, on the other hand, operate storefronts or online platforms where consumers can purchase cannabis products for medicinal or recreational use.
Biotechnology companies
As more countries legalise cannabis for medicinal purposes, biotech firms developing pharmaceuticals are gaining attention.
These companies focus on applying research and technology to develop pharmaceutical and medicinal cannabis products.
This process includes preclinical and clinical trials to assess safety, efficacy, and dosage requirements of new cannabis medications.
Ancillary cannabis businesses
This sub-sector encompasses businesses providing ancillary products and services related to cannabis.
These include e-commerce platforms, distribution networks, technology for cultivation, and a range of specialised services supporting the cannabis industry’s infrastructure.
Each sub-sector threfofe presents distinct investment avenues, reflecting varied risk profiles and growth trajectories within the evolving cannabis market landscape.
Cannabis serves two primary purposes: medicinal and recreational.
Medical Use: Currently, cannabis is frequently used for medical purposes, particularly for pain relief. It is commonly prescribed to alleviate chronic pain associated with aging, often seen as a less addictive alternative to opioids.
Recreational Use: Recreational cannabis use involves individuals using the drug for personal enjoyment rather than medical necessity. This can occur socially or individually, similar to the consumption of legal substances like alcohol.
The legalisation of cannabis has already led to the emergence of cannabis cafes in certain areas, and future innovations are expected to explore additional business opportunities in the recreational cannabis market.
The industry is currently navigating a complex and evolving legal landscape. While legalisation progresses in certain jurisdictions, regulations vary widely across the globe.
“This means that cannabis companies that want to operate on a wide scale need to adjust their business and marketing model depending on the rules in each location they operate in,” said Saxo Markets.
Governments are basically still figuring out how to regulate cannabis. If new research questions its medical benefits or if there are negative effects from legalisation, laws could change again.
“Investors should also be aware of how pricing and taxation could change, how share prices can be inflated if there are high levels of interest; and the risk of dilution as companies try to expand to meet demand,” said Saxo.
A major argument for investing in cannabis stocks is that the industry is still relatively young, with potential for substantial growth as regulations evolve and new products enter the market.
Many cannabis companies are in early stages, offering potential for high returns as they mature and establish themselves in the market.
Ongoing innovation and research are also driving the development of new cannabis-based products and therapies, creating opportunities for investors.
And finally, there’s now a broader societal acceptance of cannabis, reducing stigma and boosting consumer demand.
Here’s how the ASX weed stocks have performed, sorted by winners over the past month
| Code | Company | Price | % Month | % 6-Month | % 12-Month | Market Cap |
|---|---|---|---|---|---|---|
| ZLD | Zelira Therapeutics | 1.000 | 127% | 11% | -35% | $9,077,724 |
| NTI | Neurotech Intl | 0.080 | 31% | 3% | 82% | $80,373,698 |
| WNX | Wellnex Life Ltd | 0.030 | 20% | 20% | -25% | $39,989,683 |
| BOT | Botanix Pharma Ltd | 0.383 | 16% | 101% | 173% | $687,814,359 |
| LV1 | Live Verdure Ltd | 0.485 | 15% | -1% | 471% | $60,566,701 |
| AGH | Althea Group | 0.024 | 14% | -39% | -49% | $12,159,973 |
| ECS | ECS Botanics Holding | 0.018 | 13% | -18% | -25% | $23,193,892 |
| ALA | Arovella Therapeutic | 0.150 | 11% | 15% | 219% | $157,691,349 |
| EMD | Emyria Limited | 0.049 | 7% | -20% | -61% | $19,631,491 |
| BOD | BOD Science Ltd | 0.024 | 0% | 0% | -72% | $4,256,124 |
| ROO | Roots Sustainable | 0.007 | 0% | 0% | 56% | $1,124,217 |
| EPN | Epsilon Healthcare | 0.024 | 0% | 0% | -4% | $7,208,496 |
| AC8 | Auscann Grp Hlgs Ltd | 0.040 | 0% | 0% | 0% | $17,621,884 |
| MDC | Medlab Clinical Ltd | 6.600 | 0% | 0% | 0% | $15,071,113 |
| IDT | IDT Australia Ltd | 0.120 | 0% | 23% | 87% | $51,550,527 |
| EVE | EVE Health Group Ltd | 0.001 | 0% | 0% | 0% | $5,274,483 |
| RGT | Argent Biopharma Ltd | 0.290 | -3% | -38% | -93% | $14,001,209 |
| WOA | Wide Open Agricultur | 0.017 | -6% | -90% | -95% | $4,246,945 |
| VIT | Vitura Health Ltd | 0.094 | -6% | -66% | -82% | $54,132,136 |
| LGP | Little Green Pharma | 0.105 | -9% | -25% | -45% | $31,684,864 |
| HGV | Hygrovest Limited | 0.041 | -11% | -9% | 0% | $9,043,356 |
| IRX | Inhalerx Limited | 0.026 | -13% | 4% | -26% | $4,933,941 |
| EOF | Ecofibre Limited | 0.041 | -18% | -64% | -76% | $15,533,830 |
| DTZ | Dotz Nano Ltd | 0.120 | -20% | -8% | -52% | $60,232,642 |
| WFL | Wellfully Limited | 0.003 | -25% | -25% | -25% | $1,478,832 |
| BP8 | Bph Global Ltd | 0.003 | -25% | -60% | -80% | $1,189,924 |
| EXL | Elixinol Wellness | 0.003 | -25% | -68% | -73% | $5,284,729 |
| CAN | Cann Group Ltd | 0.031 | -26% | -68% | -74% | $13,558,671 |
| AVE | Avecho Biotech Ltd | 0.002 | -33% | -50% | -60% | $9,507,891 |
Zelira’s shares jumped after the company successfully obtained patents for its HOPE 1 and HOPE 2 formulations – which are made of cannabis-based components – from both the Australian Government’s Commission of Patents and the US Patent and Trademark Office (USPTO).
These patents specifically target the treatment of cluster symptoms linked to Autism Spectrum Disorder (ASD).
By securing these broad patents, Zelira strengthens its position in the central nervous system (CNS) therapeutic sector and expands its robust patent portfolio.
Looking ahead, Zelira anticipates further patent approvals within its HOPE portfolio from the USPTO later this year.
Separately, Zelira said it has promptly received confirmation from the US FDA for a meeting. The FDA provided a positive and clear written response to Zelira’s preliminary inquiries.
Building on this encouraging feedback and a productive meeting, Zelira eagerly awaits the official meeting notes from the FDA.
With these milestones achieved, Zelira says it is now prepared to advance its HOPE program towards submitting an Investigational New Drug (IND) application.
Neurotech has also been rising after an analysis of participants in the Phase II/III clinical trial for Autism Spectrum Disorder (ASD) has revealed notable improvements, as evaluated by clinicians using the Clinical Global Impression – Severity of illness Scale (CGI-S).
Patients treated with NTI164 showed a 36% improvement from week 8 to week 12 and a substantial 56% improvement from baseline (Day 0) to week 12.
By the end of the 12 weeks, symptoms of ASD were barely noticeable in these patients, compared to significant impairments observed initially.
Furthermore, patients who initially received a placebo and then switched to NTI164 after week 8 experienced immediate clinical benefits, showing a 21% improvement after just 4 weeks of treatment.
NTI164 is a distinctive variety of medical cannabis rich in cannabidiolic acid (CBDA) and other minor cannabinoids, with a THC content of less than 0.3%. THC is the compound primarily associated with the psychoactive effects of cannabis.
Wellnex reported a strong trading update, achieving net sales of $2.95 million in June.
The company’s revenue for the first half of the year, ending in June, reached $11.1 million, marking five consecutive months of organic growth culminating in the robust June figure.
Notably, Wellnex Life has seen a significant improvement in gross margins, rising to 40% compared to 18% in the previous corresponding period.
Looking ahead, the company plans to expand its owned product brands Wakey Wakey and Wellness Life, which are expected to drive further organic growth in the first half of 2025.
Additionally, Wellnex Life aims to explore new territories for both its branded products and intellectual property licensing offerings in the fiscal year 2025, aiming to expand its market footprint and capitalise on emerging opportunities.
Althea has unveiled its latest offering in the medicinal cannabis market with the launch of Atmos by Althea, a new range of dried flower products.
Developed in collaboration with Canadian licensed producer Rocket Factory, this launch introduces the initial products, Althea Cosmic T-25 and Althea Blast T-18.
Looking forward, Althea aims to expand its product line under the Atmos by Althea brand in the coming months, continuing its partnership with Rocket Factory to bring more innovative cannabis solutions to market.
At Stockhead we tell it like it is. While Althea Group is a Stockhead advertiser, it did not sponsor this article.
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