It's official: marijuana stocks are real and they're spectacular.
For the last few years, pot stocks have been treated less like Jerry Seinfeld and more like George Constanza. They were the moody, volatile sidekick and weren't getting the respect they deserved...
Most investors treated the companies like a bunch of playground stoners peddling pot. The average mom-and-pop investor was scared of them. Others thought the likelihood of a federal crackdown was too great to risk their money on.
They were also hard to trade, difficult to value, and pretty much off limits for big-time institutional investors.
But one massive announcement this week may have changed all of that...
Tuesday marked a milestone for the marijuana investing industry that could change the way the entire world values it.
The first "pure play" in marijuana has been uplisted to the NASDAQ exchange. Cronos Group (NASDAQ: CRON) made its grand debut on the exchange Tuesday. It is the first true marijuana company to list on a U.S. exchange.
So why is this a big deal? New companies are listed on major exchanges all the time...
Because, until now, large exchanges like the NYSE and NASDAQ wouldn't touch weed stocks with a 10-foot pole. Many have tried, all have failed.
If you wanted to invest in marijuana stocks, you'd have to buy them from Canadian exchanges like the TSX, the CSE, or on over-the-counter exchanges. None of those carry the same respect and gravitas that the big two do.
Now, this one uplisting could crack the dam and open the floodgates for marijuana stocks.
Despite the massive profits that marijuana stocks have brought to many of us, the industry really needed the legitimacy of a major exchange to assuage the fears of many investors.
Currently, one of the only big marijuana-based companies on a major U.S. exchange is Innovative Industrial Properties (NYSE: IIPR).
The difference is that Innovative Industrial Properties doesn't deal directly with marijuana. It simply leases out spaces for companies that wish to cultivate. As they say in the business, "they don't touch the plant." That is a huge distinction in a country where marijuana is still classified as a Schedule 1 drug - meaning it has "no currently accepted medical use and a high potential for abuse" and is illegal at the federal level.
That scheduling is laughable based on the many peer-reviewed studies demonstrating that medical marijuana has been shown to benefit patients suffering from chronic pain, multiple sclerosis, post-traumatic stress disorder, and epilepsy, to name a few.
Speaking of medical marijuana, biopharma company GW Pharmaceuticals (NASDAQ: GWPH) is the other big marijuana-based company that is listed on a major exchange, though it has the buffer of being a purely medical company. It develops drugs from cannabinoids, and it does not sell marijuana flower whatsoever.
Cronos Group, however, is a straight-up marijuana play.
It is a geographically-diversified and vertically-integrated cannabis company with one of the largest and most scalable operating platforms in the global medical cannabis industry.
I know it well. I recommended the company two years ago and made a fortune...
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Here's the chart since I recommended Cronos Group:
That's 2,350%. They went from $0.40 to $12.25.
I've had more than a handful of Marijuana Manifesto readers contact me this week thanking me for the biggest gains they have ever seen.
I couldn't be more proud of how far the business has come. The acceptance of a company like Cronos Group could be the sign of major movements ahead, and a complete legitimization of the industry at large. That could give birth to a slew of institutional investors who have been waiting for a sign like this to get into the controversial market. It will also make it easier for U.S. investors to buy stock.
In other words, we're about to see the "green rush" finally start flowing.
"This up listing to NASDAQ is a major corporate milestone and reflects the significant progress we have made in strengthening our corporate governance and expanding our global footprint," said Mike Gorenstein, CEO of Cronos Group.
"We believe this will increase long term shareholder value by improving awareness, liquidity, and appeal to institutional investors."
"It shows the stigma is eroding," he added. "The more you have mainstream institutions like Nasdaq underwriting and accepting cannabis as a real industry, the better it is for all of us. This will give us more awareness, more exposure, and make that transition a success."
A success indeed.
I have a dozen stocks in my portfolio that could eventually follow the same path. In fact, one California company I'm recommending could be next in line to file for a major listing.
You can read all about it here.
Godspeed,
Jimmy is a managing editor for Outsider Club and the investment director of the personal finance advisory, The Crow's Nest, and cannabis stocks advisory, The Marijuana Manifesto. You may also know him as the architect behind the wildly popular finance and investing website Wealth Wire, where he's brought readers the stories behind the mainstream financial news each and every day. For more on Jimmy, check out his editor's page.