Maybe 2% of all legal cannabis stocks have any real value. The rest are just scams, hustles, and really bad ideas.

And truth be told, it’s probably going to get worse before it gets better.

In fact, over the past few months, we’ve seen a number of small mining companies getting into the cannabis space since weakness in metals prices have been pushing so many into bankruptcy.

Now, I’m not saying you can’t make money with mining companies. But in my experience, especially with some of these junior mining companies, they tend to be insanely risky and, more times than not, run by unscrupulous management teams.

Knowing that these folks are looking to get into the cannabis space means more scammers are moving in. This means more garbage we’re going to have to sift through now to find some good deals.

Golden Leaf Holdings (CSE: GLH) (OTC: GLDFF)

In the world of legal cannabis investing, you have two choices: go with some of the larger, more established pharmaceutical companies operating in the space, such as INSYS Therapeutics (NASDAQ: INSY) and GW Pharmaceuticals (NASDAQ: GWPH), or sink your meat hooks into the smaller microcaps that make up most of the market.

Now, don’t get scared off by the word microcap. As we’ve seen with companies like Canopy Growth Corporation (TSX-V: CGC), OrganiGram (TSX-V: OGI), and Mettrum Health (TSX-V: MT), some of these microcaps can pay off quite well.

And there are others that are even smaller (we’re talking nanocaps) that could also potentially make you a lot of money over the long term if you have the patience and the risk tolerance.

Take Golden Leaf Holdings (CSE: GLH) (OTC: GLDFF), for instance. This is a U.S. cannabis oil producer that has a licensing agreement with Dixie Brands, which is one of the largest edibles companies in the country. It’s also the dominant player in Oregon and has been doing about $1.5 million in sales per month since last October.

The stock’s seen better days, but overall the company seems pretty solid. And in just a few weeks, it should see a nice bump.

You see, starting June 2, recreational consumers in Oregon will finally be able to legally purchase edibles and concentrates, according to the Oregon Department of Revenue, the Oregon Liquor Control Commission, and the Oregon Health Authority.

Not only is this good news for dispensaries and consumers, but it’s excellent news for Golden Leaf Holdings. In less than a month, Golden Leaf will be able to sell its cannabis oil products and other cannabis-based extracts and edibles to recreational cannabis customers in Oregon.

Here’s what CEO Dan Robinson had to say:

This is absolutely fantastic news for GLH. It will allow us to service a significant portion of the retail market, that, to date, has been left out of the early sales program. We have the opportunity to increase revenue and resume our growth. The environment is finally starting to settle now that we have greater regulatory clarity.

Although there is some risk with this one, there’s also a potentially huge reward.

Kaya Holdings (OTC: KAYS)

Another nanocap play in the legal cannabis space that could offer a nice gain is Kaya Holdings.

Kaya Holdings owns a couple of dispensaries in the Pacific Northwest. It also operates its own grow operations.

Basically this is a mom-and-pop shop run by some folks that were smart enough to get into the legal cannabis space early. Kaya has an established footprint in a very new market, and because it was a first mover, it’s been able to capitalize on legalization in that region as well as land the necessary licenses to operate.

Kaya’s most recent 10K indicates 2015 revenues are up 700% since sales of recreational cannabis became legal. And earlier this week we learned that the company concluded lease agreements and filed license applications for its next two dispensaries, both of which will be located next to recognized fast-food and retail chains. These folks completely understand the concept of location, location, location!

That being said, KAYS is not a stock for the risk averse. We’re basically talking about an $0.08 stock with a market cap of $7.5 million. And I don’t see any major upward movements coming for KAYS in the short term. However, over the next year or two, assuming the company can continue to expand in an efficient, timely, and financially responsible manner, there’s no reason KAYS couldn’t be a $0.20 stock.

Whether or not this will happen is still up in the air.

To a new way of life and a new generation of wealth…

Jeff Siegel