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While the global cannabis market may have disappointed investors and the stock price has not lived up to its hype, I believe there is great promise in the emerging cannabis market.
Recently, many countries and US states have legalized or decriminalized cannabis for medical or adult recreational use. This has opened up a new consumer base and allowed new companies to enter the sector. Compared to the more mature and saturated North American market, these emerging markets are still in the early stages of development.
Therefore, we believe certain geographic regions will become more likely for investors to target other regions as these emerging cannabis markets grow faster than others. These markets do not have such red tape, and many have already established momentum for decriminalization or full legalization.
Here are three emerging cannabis markets for investors to explore.
Thailand
Thailand recently became the first country in Asia to decriminalize cannabis, primarily for medical use. This has opened new avenues for medical tourism. Thai entrepreneurs are currently exploring ways to incorporate cannabis into Thailand’s traditional medical practices, health resorts, and spa treatments.
It should be noted that while it has been decriminalized for medical use, Thailand’s new conservative coalition government is moving forward with a ban for recreational use. However, given that Thailand is an important destination for tourism and general health, I expect it will continue to be one of the key emerging cannabis markets for US investors to keep an eye on.
Investors can gain exposure to the Thai market and other markets on this list through ETFs like . Amplify Alternative Harvest ETF (NYSEARCA:M.J.). This ETF focuses on the global cannabis industry, which means exposure to Southeast Asia. The expense ratio is 0.78% and the dividend yield is 4.56%.
Mexico
Mexico has been moving toward full legalization of marijuana for several years. If the bill passes, it could become one of the largest legal markets thanks to its population and tourism industry.
The potential economic impact of legalization is significant. Estimates suggest that the legal cannabis market could generate billions of dollars in tax revenue and create thousands of new jobs.
However, the details of the regulation are still being debated as the legislative process moves forward, including the rules for public consumption and the scope of commercial licenses.
To take advantage of Mexico’s changing stance on cannabis and elsewhere, US investors can invest in ETFs such as: Horizons Marijuana Life Sciences Index ETF (OTCMKTS:HMLSF).
This ETF tracks the North American Marijuana Index and aims to create a comprehensive basket of North American stocks with significant exposure to the global cannabis market.
Germany
Germany this month became the largest EU country to legalize cannabis for recreational purposes. Adults over the age of 18 can now carry up to 25 grams of dried cannabis and can grow up to three plants at home.
In 2018, the market value of medical cannabis alone reached more than €73 million, and the legalization of recreational use offers further potential for a broader cannabis market.
The German market is expected to grow significantly and is estimated to be worth $4.6 billion annually. Legalization includes the establishment of cannabis clubs, which could generate sales of up to €2.4 million per club.
These factors position Germany as one of the emerging cannabis markets investors should keep an eye on. Although a Germany-specific ETF addressing demand in this region has not yet been launched, both the HMLSF and MJ ETFs offer implicit exposure through international coverage, and investments in both are expected to benefit from the German cannabis market. This means that it could help lock in upside room for . .
On the date of publication, Matthew Farley did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the author; investorplace.com Publishing guidelines.
