The Auscann Group Holdings Ltd share price is up 172% in a month: Is the pot stock a buy?

One of the biggest movers on the market today has been the Auscann Group Holdings Ltd (ASX: AC8) share price.

With its shares up 10% to 54.5 cents, AusCann has now seen its share price rise by a staggering 172% since listing on the ASX at the start of February.

What caused the rally?

One of the key catalysts to this incredible rise was the government’s plan to allow medical marijuana companies to distribute cannabis oils and medications in Australia in the very near future.

Furthermore, until sufficient supply is available in Australia, companies will be able to fast-track imports from overseas sources.

Should you invest in AusCann?

Investors certainly have a lot of choice when it comes to pot stocks. The likes of Zelda Therapeutics Ltd (ASX: ZLD) and MMJ Phytotech Ltd (ASX: MMJ) are two other notable companies on the market.

But overall I think AusCann is arguably the best of the lot thanks to its highly experienced and influential management team and its significant ties with Canadian-giant Canopy Growth Corp.

The CAD$1.7 billion market leader has a major shareholding in AusCann and provides it with royalty-free access to its expertise and intellectual property in the cultivation, manufacture, and supply of high-quality medicinal cannabis products.

AusCann will then market these products for the treatment of palliative care symptoms, chemotherapy-induced nausea, treatment-resistant childhood epilepsy, and chronic pain.

Whilst this is all very promising, at the current share price I believe there is a huge amount of growth baked into the AusCann share price.

For this reason I would suggest investors hold off an investment and wait to see if its sales figures end up justifying its market valuation.

Instead of risking your money in pot stocks you could take a look at these incredible growth shares. I'm tipping them for big things in 2017. Are they in your portfolio?

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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