iStock.com/ossyugioh Marijuana News Today
In the marijuana news today we have more evidence that the industry is indeed gaining legitimacy as a growing number of institutional investors are beginning to enter the market.
One of marijuana’s biggest drawbacks has always been the stigma surrounding what was only a few years ago criminalized across the globe with few exceptions.
Now, institutional investors like banks and hedge funds are still extricating themselves from that old way of thinking. But progress is being made. (Source: “Big Money Tests Marijuana Waters, With Hedge Funds Leading Charge,” Bloomberg, July 12, 2018.)
While the percentage of institutional investors owning pieces of the marijuana business is still extremely low (we’re talking single digits for many companies), there is an increased interest from bigger funds to get in on the marijuana action.
For instance, among the two companies listed on U.S. exchanges—Cronos Group Inc (NASDAQ:CRON) and Canopy Growth Corp (NYSE:CGC)—we’re seeing a much higher stake being gobbled up by big investment funds.
About 18% of CGC stock is held by institutions, while CRON stock is about 22% controlled by bigger investment groups.
While those numbers certainly trump most of their competitors, that’s still on the lower end compared to many other large companies in powerful markets.
In most other industries you’ll often see institutions owning as much as three-quarters of massive billion-dollar-plus companies.
So there’s still a ways to go, but the fact that there is a budding push from institutions to get more involved in marijuana stocks is a fantastic thing for the industry.
After all, consider how fast these marijuana stocks have grown without the massive capital injection that banks and hedge funds can provide. We’re talking literally billions of dollars of untapped capital that we can reasonably expect to enter the market within the next few years.