Investors are familiar with the headline names in the cannabis industry, but the very fact they’re so well known indicates they may be trading at valuations that reflect the attention they’ve received…
For those wanting to catch the green wave ahead of the rest of the market, looking in out-of-the way places or in stocks that aren’t typically associated with marijuana is a good way to profit. 22nd Century Group (NYSEMKT:XXII), Planet 13 Holdings (OTC:PLNH.F), and Clever Leaves (NASDAQ:CLVR) are three under-the-radar stocks that could offer investors their best chance of getting in ahead of the crowd.
A cannabis biotech prepares for liftoff
Alex Carchidi (22nd Century Group): 22nd Century Group is low-profile because it doesn’t sell any cannabis products to consumers, nor does it plan to. Instead, the company is establishing an unprecedented level of control over the level of psychoactive chemicals contained in marijuana plants via its cannabis genetics platform. That’s something other cannabis businesses are going to be willing to pay big for because it’ll improve their ability to make money.
Much like how different types of beer taste distinct despite containing the same active ingredient (alcohol), cannabis products also provide different experiences depending on the proportions of their active ingredients, called cannabinoids. Controlling the mix of cannabinoids in marijuana plants is thus key to differentiating products from the competition and creating brand power to protect market share. And that’s 22nd Century’s forte, which makes it a great collaborator for almost any other business in the industry.
In particular, 22nd Century’s plant genetics technologies will help other companies maximize their plants’ yield of economically important cannabinoids like cannabidiol (CBD), thereby improving their profit margin. When each plant you grow produces more of the chemical you need for processing into other products, you don’t need to grow as much. Customers will also be able to fine-tune the different cannabinoids in their crops to fit consumer preferences. What’s more, the first revenue from licensing of its cannabis genetics intellectual property (IP) should start to roll in by the end of 2021. And while it isn’t profitable yet, that could change over the next couple of years as more revenue comes online. So be sure to keep an eye on this stock — it might not stay out of the public’s eye for much longer.
An out-of-this world weed experience
Eric Volkman (Planet 13 Holdings): Most marijuana companies concentrate on one, several, or all of the following activities: growing, shipping, and selling weed products. At the end of the day there is a rigidity to the business, with success coming from how efficiently a company can perform its chosen undertakings.
But Planet 13 Holdings, which is centered on retail, is different. The company aims to make shopping for weed an experience, with the idea of making its dispensaries more than just outlets in which to buy product. In fact, these massive facilities are more like garishly decorated IKEAs for cannabis, with sprawling product selection amid vibrant, trippy design elements — giant interactive lotus flowers, anyone?
This approach is successful enough to make the company’s flagship “SuperStore” near the Strip in Las Vegas a big tourist draw for enthusiasts visiting Casino City, not least because it’s the…
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