The November 2016 election added eight states to the number in which either medical or recreational marijuana (or both) are or will be legally for sale. In all, 29 states and the District of Columbia have legalized possession and consumption of marijuana to some extent.
Recreational marijuana use is now legal in eight states — Alaska, California, Colorado, Massachusetts, Maine, Nevada, Oregon, Washington — and the District of Columbia. Marijuana Business Daily estimates U.S. retail sales of legal cannabis products will total up to $6.1 billion in 2017 and could rise to $13.7 billion by 2021, of which about $10.3 billion would be recreational sales.
According to the Marijuana Business Daily’s 2017 Marijuana Business Factbook, the impact of cannabis products on the U.S. economy will rise from an estimated total of $20.4 billion to $24.4 billion this year to an estimated $47.6 billion to $68.4 billion by 2021. The estimates are based on sales of medical and recreational marijuana at the retail level, including flower, infused products and concentrates. For each dollar spent at retail, the Factbook estimates that the economic benefit realized amounts to an additional three dollars.
If there are two developments that will drive cannabis product sales next year they are the January launch of legal sales in California and the July kick-off of legal sales throughout Canada. In California, the state has begun issuing licenses for retail shops, but most are in the big population centers and some observers believe it could take two years for legal sales to become available throughout the state.
In July, Canada becomes only the second country — Uruguay was first — to institute legal sales for an entire nation. Estimates of Canada’s recreational sales alone reach $2.3 billion to $4.5 billion by 2021.
Which are the largest companies poised to take best advantage of the coming boom in legal marijuana sales? One way to look at that is to identify the largest companies in the sector and see how they have performed over the past year.
To do that we used The Marijuana Index and ranked the top 10 U.S. and Canadian companies by market cap. We included only those companies that trade on major exchanges and not solely over the counter. Where one company trades on the Toronto Stock Exchange (TSX) in Canada and over the counter in the United States, we use only the exchange data for market capitalization. Also note that some of these companies participate in other industries as well, but their cannabis-related business is big enough for them to be included on The Marijuana Index.
Here are the 10 largest marijuana companies, listed by market cap as of December 29, the last trading day of the year, along with the company’s 2017 share price growth. Toronto-traded equities are shown in Canadian dollars (as of December 29, C$1 equals $0.80).
>Market cap: $6.15 billion
>2017 share price growth: +18.4%
Scotts Miracle-Gro Co. (NYSE: SMG) has limited its activity in the marijuana market to acquiring hydroponic growers and carving out a space for itself as the leading supplier for indoor growers. Fiscal year 2017 revenues more than doubled in the company’s hydroponics-heavy Hawthorne segment. Shares closed at $106.99 on Friday and the stock’s 52-week range is $81.48 to $108.04.
> Market cap: $5.68 billion
> Year-to-date stock price change: +216.7%
Canopy Growth Corp. (TSX: WEED) is a diversified cannabis company that produces and sells legal marijuana in the Canadian medical market. The company is well-positioned to grow when legal recreational sales begin. Alcoholic beverage giant Constellation Brands Inc. (NYSE: STZ) invested C$245 million for a 9.9% stake in the company. Shares closed at C$29.74 on Friday and the stock’s 52-week range is C$6.58 to C$33.09.
> Market cap: $3.35 billion
> Year-to-date stock price change: +18.5%
GW Pharmaceuticals PLC (NASDAQ: GWPH) is a biopharmaceutical company that develops and commercializes therapeutics using a proprietary cannabinoid product platform. The firm’s cannabidiol treatment for rare forms of epilepsy has received orphan drug and fast-track designation from the U.S. Food and Drug Administration. The drug — Epidiolex — has done well in trials, but a competing non-cannabinoid drug has recently stolen some of GW’s thunder. Shares closed at $132.01 on Friday and the stock’s 52-week range is $92.65 to $140.52.