Are you waiting to identify the next big game changer in your investment plan? Have you considered getting high on marijuana penny stocks? Investing in medical marijuana penny stocks is the latest craze around Wall Street.

But the question is what are medical marijuana penny stocks? Well, they are all plays on the hitherto forbidden drug, marijuana. The US Government in March 2017 legalized the use of recreational marijuana in eight states, and in 28 states in all, use of marijuana for the medicinal purpose was made legal.

The decision instantly led to a spike in the number of business ventures based primarily on marijuana. From the actual growers to products based on marijuana to pharma companies using it, the list just continues. Needless to mention then marijuana found a way into the stock markets too. The medical marijuana penny stocks are indeed the flavor of 2017.

Should You Invest in Medical Marijuana Penny Stocks?

The question is how wise it is to buy medical marijuana penny stocks and most importantly how do you decide which medical marijuana penny stocks to buy? Here is a quick lowdown on the best medical marijuana penny stocks to buy in 2017 and how wise it is to invest in these counters.

But before that, it is important to understand the business fundamentals of these medical marijuana penny stocks and the risk they embody. After all, you must understand though the use of medical marijuana has been legalized, it is treading into gray zone no doubt. Moreover, political, economic and social factors are also key matters of concern in this matter.

You do not have any major or established player in this field. Most of the medical marijuana stocks that are available in the market are penny stocks. The average share value is less than $1. You do not have companies valued more than $100 million and thanks to them trading mostly in Over-The-Counter and Pink Sheet segments, there is barely any regulation managing them.

Even the other prominent public players have significantly small or no stake in these medical marijuana penny stocks. But does it mean that you should absolutely avoid them? Well, think about how the gold mining business was in the 19th century? Did you even consider gold becoming one of the biggest international benchmark and hedge it is now? Or think about the way we considered software stocks way back in the 1970s. Who would have thought about the technology boom?

This makes your decision to invest in medical marijuana penny stocks even more difficult is the unabated growth that the sector is experiencing. In fact, legal marijuana sales in US, as per some recent studies, has risen a phenomenal 36% to close to $7 billion by the end of 2016. The estimates indicate that legal cannabis sales could actually breach the $50 billion mark in another 10 years by 2026. Therefore it becomes very important to choose wisely to get the best medical marijuana penny stocks to buy in 2017.

What Are the Best Medical Marijuana Penny Stocks to Buy in 2017?

In the list of what medical marijuana penny stocks to buy, here are some of the top contenders:

1. AbbVie Inc
2. Cara Therapeutics
3. GW Pharmaceuticals
4. Insys Therapeutics
5. Corbus Pharmaceuticals
6. Aurora Cannabis

1. AbbVie Inc

This is a NYSE listed penny stock, dealing with pharmaceutical products. The company has many FDA approved medical products with proven medical benefits. Humira, Marinol, Kaletra, Lupron, Creon are some of the best known offerings from the company. Among all its offerings, Marinol, used for AIDS patients and those undergoing Chemotherapy, is known for its effectiveness and popularity. This drug is marijuana based.

The question is how legalizing medical marijuana use would impact the sales and future prospects of the company. Though the 3.9% dividend announced by the company is attractive, over the past four quarters, it has shown almost stagnant revenue and profit growth.

The question now is would easing regulations related to marijuana improve the prospects of this medical marijuana penny stock? How would Marinol’s profitability be impacted by the significant easing of regulations with respect to marijuana? The major positive for the penny stock has been the upward trajectory of dividend growth. It has risen above 12% in the past three years.

2. Cara Therapeutics

This counter is operating on the Nasdaq platform that is deeply based on the use of marijuana for medical use. This company was found in 2004 and based in Connecticut and one of the toasts of 2017.

Currently trading at a share value close to $5 levels, analysts expect this counter to rise as much as $20 going forward despite the stock price dropping as much as 60% since the start of 2017.

This penny stock is also a pharma player. They specialize in creating products targetted towards the body’s peripheral nervous system. One of its most talked about product is undoubtedly CR701, an advanced CB Compound aimed at treating various kinds of inflammatory and neuropathic pain.

The recent easing of regulation with respect to the use of marijuana for medical purposes is set to provide a major fillip to the company’s prospects. With the legalizing of the use of marijuana in 28 US states, the company is likely to focus on marijuana based pain relieving products.

Analyst recommendation also indicates that several market players also expect the stock price and its prospects to spike up going forward.

3. GW Pharmaceuticals

Though extremely speculative and quite a risky proposition, this is one the best medical marijuana penny stocks to buy in 2017. GW’s poster boy performer, Epidiolex, used for treating seizures related to rare conditions, is a Cannabidiol drug or in other words, its key ingredients include Marijuana. Though thus far it was illegal, the govt recently legalized the use of Marijuana in 28 states.

The prospects got even more promising as this drug has been experiencing one success after another. The company, after its third stage success studies, is set to file with US FDA by the middle of this year. This is after Epidiolex yielded several successful results in tackling seizures related to Lennox-Gastaut syndrome, rare epilepsy. Before that, this medical marijuana penny stock also declared that Epidiolex’s late-stage study was effective in treating seizures related to another rare kind of epilepsy in infants, Dravet syndrome.

With the recent easing of norms with respect to the use of marijuana for medical purposes, the market is awaiting its US FDA filing with great anticipation. Some segment of analysts and the generic market estimates peg Epidiolex’s annual sales close to $3 billion if they win the US FDA approval. It is interesting to note that GW Pharma’s current market cap is close to those levels.

However, there is a distinctly conservative set of analysts as well who see sales for Epidiolex to range around $300-800 million levels. Even at those levels, the potential room for upside is distinctly strong in this stock. Moreover, the entire run-up in the stock price has been based entirely on speculation and assumption of better and greater profitability going forward.

That said, the overall market sentiment is significantly bullish at the current point. This medical marijuana penny stock continues to attract interest given the current easing of marijuana regulation.

4. Insys Therapeutics

This medical marijuana penny stock has had a rather interesting stock market movement to track. After hitting an all time high of $45 on 2015, the stock nosedived to under $10 levels and currently is trading just above those levels. But even at these depreciated levels, its upmove is marked with huge volume trade.

For most investors interested in taking a position in this stock, it is based entirely on the volume breakout. The fact that it is only two of the pharma companies that have cannabis-related drugs approved by the US FDA is surely a major factor backing these volumes.

For many momentum players, the recent US Government’s move legalizing the medical use of marijuana in 28 states has been a key catalyst driving the high volumes in the stock.

It’s most successful product is Syndros that has marijuana as its primary product. This drug is used for anorexic patients. Its key effect is to induce hunger in those suffering from severe anorexia. Experts feel this drug has the potential to be a best seller and drive sales and revenues for the company going forward.

5. Corbus Pharmaceuticals

This is another interesting option in the list of medical marijuana penny stocks to buy. This was one of the top marijuana plays in 2016, and given the current environment in 2017 and the way the stock price is spiking up, it is set to continue its uptrend in the near future.

The market is most excited about its oral drug, Resunab. This is an endocannabinoid-mimetic drug. In simpler terms, this drug uses marijuana or cannabis as one of the key constituents. This is a drug that is being developed to cure an autoimmune rheumatic disease which is chronic in nature.

The mid-level studies of this drug have been positive and with the recent easing of marijuana related regulations, investors are evincing renewed interest in this medical marijuana play.

It has two mid-stage studies that are due to be announced this year, and if these prove to be positive, the stock price is likely to get an additional boost. In the event of a positive outcome, the stock price could potentially skyrocket to exceptionally high levels.

Especially after the 18.5% fall, it experienced late last years, the current valuations provide interesting entry points. But that said, this is a very high risk stock and needs to be handled with appropriate care and concern.

6. Aurora Cannabis

Unlike the other players’ features thus far, this medical marijuana penny stock is a cannabis grower. Based in Vancouver, this company grows, harvests and sells marijuana. With a plantation facility spanning over 55,000 square feet, this company is no doubt seen as a major gainer of the recent US regulation with regards to marijuana. In a landmark decision, The US Government legalized recreational marijuana in eight states, and it is now legal to use it for medical purposes in 28 states.

The stock price, quite expectedly has seen a 90% spike in prices in the last 3-4 months. The fact that it offers free shipping from Canada and Canada’s proximity to US cannot be overruled in way.

They have created quite a repute for themselves in terms of quality. Aurora Cannabis is one of the most well known providers of high grade medical quality marijuana. Quite understandably then the stock is one of the better known and much in demand medical marijuana penny stock to watch out for in 2017. However, risks associated with these plays cannot be underestimated.

Conclusion

That exactly is the key concern when you are trying to analyze what are medical marijuana penny stocks in details. Despite the run-up in stock price, the sustained gains and possible regulatory support they have, it is important to understand they are still penny stocks.

If only percentage of gain is your pre-condition to buy a stock, then these are undoubtedly the best buys in 2017. But fortunately for you, the market on any day offer better returns and more dependable plays with a greater rate of sustainability and much lesser risk associated with its profile.

There are primarily three reasons that medical marijuana penny stocks should be best avoided.

Not Transparent: Almost all of them are penny stocks. This means they are mostly operating through OTC or pink sheets. The level of disclosures is pretty limited here, and often the stocks are rather illiquid with low volumes. This casts those many layers of concern to your investment.

Low Access To Banking: One of the biggest concerns with most medical marijuana penny stocks is the limited access to reliable banking services. Most financial institutions ultimately are answerable to Governments, and in many cases, if they agree to provide banking services to the marijuana driven business, it could also be construed as money laundering.

Taxation Policy Not Applicable: The financial statement of the medical marijuana plays invariably has tax issues. According to the existing US taxation norms, they cannot make normal tax deduction.

Therefore we can conclude that though the list of the best medical marijuana penny stocks to buy in 2017 throws up some immensely interesting names with strong growth prospects, these are stocks that need to handle with care. It is not wise to invest in these penny stocks just because they are the flavor of the moment.