All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Invest in cannabis: A how-to guide
Find out the 3 ways to invest in cannabis legally. Yes, you can.
It might take you by surprise that you can invest in cannabis legally, given that marijuana is a class B drug that’s illegal to possess, grow or sell in the UK. You might also be surprised that the UK is the largest exporter worldwide of legal cannabis. Some commentators tip it as the next big thing in investing, as more countries are legalising its use, both medically and recreationally. There are still concerns about its effects as a recreational drug and strong views on both sides about legalisation. Our guide covers how you can invest in cannabis (legally).
Is it legal to invest in cannabis?
Investing in cannabis is legal, as long as you’re not selling it for recreational reasons. You can buy cannabis-related stocks without the police rocking up at your doorstep.
You might be confused about how you can invest in cannabis if cannabis itself is illegal. In 2018, cannabis products were made legal by prescription only for medical use in England, Wales and Scotland. It could now be considered to be a legal commodity.
How to invest in cannabis
There are three main ways to invest in cannabis:
- Buy stocks and shares in UK cannabis companies.These might not be solely cannabis based.
- Buy international cannabis stocks. Again, these companies may not focus solely on cannabis.
- Buy cannabis exchange traded funds (ETFs). This is a bundle of stocks and can help diversify your portfolio.
We explain these in further detail below.
Strategy 1:
Buy stocks and shares in UK cannabis companies
There are several companies that are allowed to grow cannabis in the UK and two pharmaceutical products licensed: Sativex and Nabilone. Most cannabis grown in the UK is exported.
Some companies are listed on the London Stock Exchange or Alternative Investment Market (AIM), but they’re not focused purely on marijuana. If you want to find companies that are solely cannabis-based, you’re more likely to find them listed on the NEX exchange.
There are some UK companies that produce cannabis for a wide range of different uses. Here are some to keep an eye on:
- GW Pharmaceuticals. Produces cannabis for medical purposes including Savitex (used to treat multiple sclerosis) and Epidolex (used to treat epilepsy).
- Associated British Foods. One of the UK’s largest producers of legal cannabis, which it supplies to GW Pharmaceuticals.
- Futura Medical. Specialises in producing gels and creams called DermaSys (could be used to treat erectile dysfunction).
- AfriAg. Has recently entered the medical cannabis market.
- Integumen. Currently testing its platform to create CBD-based goods, such as beauty and skincare products, pain relief and wound care.
- Zoetic International. A CBD business planning to launch a range of cosmetics and beauty products.
- Sunrise Resources. Plans to produce pozzolan, a perlite used in cement and concrete.
- Cellular Goods Creates skincare and ingestibles made from compounds produced by the cannabis plant, such as CBD and CBG.
UK cannabis stocks
Here’s the 5 year (or most available) history of the UK cannabis companies above and their ticker symbols if you want to invest in any.
Strategy 2:
Buy shares in international cannabis companies
Some of the biggest cannabis companies are listed on stock exchanges in overseas markets such as the US or Canada. It’s possible to invest in these if you use a broker that offers global stocks. Here are some international companies involved in legal cannabis and their 5 year history.
Strategy 3:
Buy cannabis exchange traded funds (ETFs)
ETFs contain a bundle of stocks, usually hundreds, and these often track an index of stocks. This means that you’re not sticking all your eggs in one basket, allowing you to diversify your portfolio and manage risk. There are only a limited number of cannabis ETFs in the UK.
Compare share trading platforms
Bottom line
Cannabis has been pretty attractive to investors in 2021, potentially due to several US states considering the legalisation of cannabis in 2021. This is an expanding industry and it’ll be interesting to see where it will go.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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