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Could Kanabo be the best share to buy for me for the long-term?

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Powder of Cannabis (Drugs), Analysis of Cannabis in laboratory.
Image source: Getty Images

Consider this. Cannabis regulations are being relaxed. This could mean a spurt in legal demand. Companies in the segment can, of course, benefit from this. One of these is the medical cannabis producer Kanabo (LSE: KNB).

The company’s unique selling point is a metered dosage inhalation device, that allows prescription of exact quantities to be consumed for health challenges like pain management. This is a clean alternative to smoking it. 

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Kanabo makes progress

Kanabo is now ready to ship cartridges required to use the device to the UK under the brand name NOIDECS. These have been manufactured in Poland in partnership with PharmaCann Polska, which I talked about when I last wrote of the stock.

This is fairly quick progress. In the last four months, the company has gone from signing partnerships for both production and distribution of its products, to actually getting them in the market. 

Awaiting performance updates

As a potential investor, I am now keen to know how the market responds to it. The numbers available for the company, albeit based on its pilots, are somewhat encouraging. I will now look out for its next operational as well as financial update to see how its market is growing. 

If these updates are positive, they could well give a fillip to the Kanabo share price, which has languished for some time now. Even though its initial public offering (IPO) at the London Stock Exchange a few months ago was encouraging, the share has fallen quite a bit since. It is now trading at less than half the highs of around 41p it saw shortly after listing. 

Pros and cons for the Kanabo share

I can see why. The company operates in a still nascent sector that is vulnerable to regulatory changes. Its product’s value is still unproven and it is just about getting into the market. And even if the sector does take off, individual companies can still struggle from a host of issues from effective management to market penetration. 

At the same time, many of the big and successful companies we see today were fledgling startups in new market segments at some point. If cannabis does take off in a big way, then there is potential for Kanabo to become the best share to buy in a decade. 

Best share to buy?

However, it is too early to say what will happen next. I would like to see more updates from Kanabo first. This will help me to assess its own pace of progress as outlined in its latest release. But crucially, as I was saying earlier, it will help me understand how the market responds to its products. 

The past year has been a challenging one for it, like it has been for many others during the pandemic. But even since its listing in February, I do not have any new numbers to work with. Once they do, I will be in a better position to determine if Kanabo can indeed be a great investment. Until then, I will watch the stock.  

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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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