The green rush has led up to 29 U.S. states’ legalizing marijuana in one way or another. Some passed laws legalizing cannabidiol (CBD), a non-psychoactive cannabinoid found in the marijuana plant and others have passed more complete medical marijuana laws. Furthermore, Alaska, Colorado, Oregon, and Washington already operate recreational marijuana markets, and Americans will also see recreational markets in California, Maine, Massachusetts, and Nevada. Although individual states are legalizing marijuana, it remains illegal at the federal level which is responsible for keeping a cap on the market.
Investors seeking to invest into the industry are better off concentrating on Canadian marijuana stocks rather than U.S. marijuana stocks, for the time being. Canada currently possesses a deep-rooted and nationally regulated medical marijuana market and the country is approaching recreational legalization in 2018. Two Canadian marijuana stocks you should keep your eye on next year are are Canopy Growth Corp. (TWMJF) and Aphria, Inc. (APHQF).
Canopy is the leader of Canada’s marijuana industry and has generated $44 million in sales over the past year. The company is positioning itself to profit from developing marijuana markets around the globe. Although, it isn’t pursuing a U.S. growth strategy since marijuana remains federally illegal and doing so could jeopardize obtaining licenses to export to other countries. It has also made some strategic business moves by acquiring competitors, partnering with Constellation Brands (STZ) to make marijuana-infused beer and investing in production capacity to capitalize on the recreational market.
Aphria’s (APHQF) sales totaled $16.8 million this year and although smaller, should not be looked past. This marijuana stock is also increasing production capacit, in its prep for recreational legalization. The company recently sealed the deal to be the sole supplier of dried marijuana to Shoppers Drug Mart as well as Pharmaprix, two pharmacies throughout Canada. The company should see a nice spike in revenue when legalization launches.
There’s no doubt that the U.S. marijuana market is going to continue grow next year, but it will require changes on the federal level to see its full potential. Although, Canada’s market opportunity isn’t as large, it is more transparent and looks like a safer bet for investors.
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