As the global cannabis markets continue to push forward, many investors are taking a closer look at cannabis stocks to add to their portfolio. Here’s our list of 4 things to consider before making your entry point.
1. The Leadership Team
Cannabis Companies are heavily dependent on the leadership team managing the effort. In such a highly controversial and regulated space, you need to have a CEO and C-Level team ready and willing to work with a sea of legislators, regulators, and more to be successful. Our first consideration when looking at a Cannabis Company is who is working behind the scenes to bring it to fruition.
We interview a lot of CEOs here at SmallCapVoice, and recently we had the privilege of talking with Yftah Ben Yaackov, CEO and Director of BYND Cannasoft, Inc. (Nasdaq: BCAN, CSE: BYND). These types of opportunities to talk with C-Levels are valuable opportunities to see a company in a new light and understand the drive behind the press releases.
2. The Stock Sentiment
A lot of times, trades look at filings, charts, and other due diligence before deciding, but if there is anything we learned over the past 2-3 years is this: stock sentiment from retail shareholders should never be ignored.
With enough momentum from retail investors, a cannabis stock can surge on news normally ignored in other sectors. Cannabis investors tend to be of a younger demographic and, as such, have emotional connections to the companies they invest in. Understanding the rallying support behind cannabis plays drastically changes the landscape.
3. The Company Trajectory
Cannabis moves on a different pace from other sectors. As moves are made in Washington or in the global regulatory space, cannabis responds. While slightly resistant to the macro-economic situations (inflation, supply chain, etc.), cannabis companies are very dependent on political moves of various heads of state. As such, many cannabis companies position themselves appropriately in the current market within current capabilities but forecast the trajectory of the company once regulations have changed.
Going back to our recent interview with BYND Cannasoft, Inc. (Nasdaq: BCAN), Yftah explained that currently Cannasoft is operating with a “no-contact” approval, allowing them to operate in the space without directly handling the product. While this might currently limit companies like BCAN from growth, the companies approaching things from a legally sound POV will be able to quickly reposition in the market as the regulations shift.
4. Find Something The Resonates
Above all, find something you can personally rally behind. There’s dozens of cannabis companies on the market with hundreds of unique products at market or close to it. From female healthcare to biofuels, companies are using cannabis in new ways to solve real problems in the world. Find something that excites you and resonates with you. Cannabis can be a volatile space but holding something you believe in can make it worthwhile.
The cannabis market might be a bit overwhelming when you first approach them but using these 4 considerations will help you navigate as you conduct your own due diligence. Happy hunting!