Three Cannabis 2.0 Companies

The cannabis craze, like all things bipolar, has put the market through the ringer in the past. 

Just one look at this chart, which belongs to one of the biggest in the business, Aphria Inc. (Toronto: APH.TO), illustrates how years before the mania hit, a previous bubble had collapsed prices more than 75%. 

It’s the nature of anything that dominates the trends. From the automobile to the internet, they’ve all had their initial, short-lived crazes before real long-term growth was achieved.

Exhibit A: More than 90% of the carmakers that ever existed were born and died before 1920 — when the initial manic push into the industry was gradually neutralized by efficiency and standardization, allowing for the major makers like Ford, Dodge, and Chevrolet to dominate a market many times the size. 

Exhibit B: By some estimates, more than $5 trillion was lost when the manic internet craze finally hit the brakes in 2001, and yet since the dot-com bubble burst, total internet usage has grown by a factor of 100. 

Today’s big buzzword is one all investors are well familiar with: cannabis. 

Back in the early 2010s, as the first major decriminalization and legalization initiatives started to take hold in some of the nation’s more liberal jurisdictions, we saw the rise of the first generation of cannabis enterprises — the aforementioned Aphria being a prime example. 

But as mania slipped into depression, the industry was hit hard between 2012 and 2014. 

Even as the rest of the markets raged on with drunken abandon, investors viewed cannabis as an increasingly risky chance to take, fraught with scams, false promises, and projections based on legislative reform not yet guaranteed. 

For those heavily invested in that first burst of excitement, that was when the real hangover set in. 

Like the growth rings of trees from a drought-ridden forest, that hangover is evident in the charts of most major cannabis-focused companies operating back then.

It kept the industry on a flat line through 2015 and only allowed for some lethargic growth until the start of 2016. 

And then, the awakening.

2016: Cannabis Hits Its Mature Growth Pattern

Legitimacy, powered by a wave of pro-cannabis legislation, suddenly sent the entire industry into vertical rise that made the initial run-up look like a coma by comparison. 

Besides being bigger, the second coming of the cannabis industry was also smarter and more diversified. 

Entire support industries sprung up around the skyrocketing demand — companies that on the surface looked more like technology firms than players in the horticultural industry.

Like Ford and Dodge and Chevy, these companies are turning what was once a cottage industry product into a building block and component of an entire consumer revolution, with products ranging from neurodegenerative disease-treating drugs to plastic packaging.

It’s these companies, the ones that supply, improve, or facilitate the production of cannabis and cannabis-related products, that are responsible for what’s been one of the greatest bull markets of the 21st century. 

I’ve come to call the companies in this class Cannabis 2.0, as they are building the second tier of what was once a very narrowly implemented commodity. 

Like I said, they come from a variety of specialties, but right now, I’ve isolated three that I believe will rise as leaders of their respective niches, catalyzed by persisting growth in demand.

Not Just Another Vape Manufacturer

One of these companies is so advanced that it’s managed to create the active ingredient in cannabis — tetrahydrocannabinol (THC) — synthetically. 

This allows the company to develop and market the most effective drugs in existence for the treatment of terminal diseases like Alzheimer’s and Parkinson’s without concern for remaining cannabis prohibition. 

Another of the companies is working on an indoor cultivation system that has the potential to revolutionize the farming industry by creating systems of massive urban-based grow factories. 

Once complete, this evolution in agriculture could be the most profound change in the way we produce food since the very advent of seasonal farming. 

If all goes according to plan, both of these companies are looking at three- to four-figure growth in the next two years.

And then there’s the matter of the third company, which supplies the entire industry with merchandise essential for product marketing and distribution. 

It’s a perfect example of an offshoot niche that doesn’t deal directly with the core resource but has managed to outpace the general industry in terms of growth. 

With demand expanding the way it is now, I can’t even begin to nail a prediction on where this California-based company will be in a couple years, but it could be the biggest gainer of them all. 

These companies aren’t your run-of-the-mill growers or pipe makers… They’re an entirely new generation of tech firms built from day one to evolve and expand on a basic resource. 

The New Guard Is Here… Where Are You?

If you think recent cannabis mania is a flash in the pan, or a bubble waiting to burst, just look at history… 

The cannabis bubble has already come and gone. Today, we’re in a mature growth pattern that should sustain itself for years to come. 

If you want to be there for the best part of the chart — the next 18 to 24 months — you’ll need to know everything there is to know about the companies of Cannabis 2.0.

Specifically, those three I outlined above. 

In the coming months, perhaps weeks, I expect all three to make substantial progress as a steady stream of news draws in more and more investors. 

That’s just the inherent nature of a fast-moving industry. 

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Fortune favors the bold,

Alex Koyfman

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