How Will Marijuana Stocks Be Affected by Cannabis Legalization
This week marks a crucial time for the stock market and marijuana stocks. Currently, the market is on an upward trend as the U.S. has elections and the Federal Reserve meets on monetary reports. Indeed, November will be a game-changer with leading pot stocks. Many cannabis companies like Florida based Trulieve Cannabis Corp. (TCNNF Stock Report) are waiting for the federal government to move forward with legalization policies for cannabis in 2021. As most Americans become comfortable with marijuana for medicinal and recreational use, the cannabis industry would benefit from federal legalization.
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It’s important to realize how regulations have held cannabis companies back with banking in the U.S. markets. As it stands the SAFE Banking Act would stop federal regulations from interfering with legal cannabis companies. This with the fact marijuana companies could obtain financing offered by banks would help the cannabis industry in the U.S. With this in mind cannabis companies like Green Thumb Industries Inc (GTBIF Stock Report) are establishing dispensaries in legal states. Although cannabis stocks have a turbulent past in the market, the future could hold more stability with nationwide legalization in the U.S.
How Big Is The Cannabis Industry Going To Grow?
As the cannabis sector expands investors can become part of an industry that is predicted to grow into a $73.6 billion global market by 2027. Currently, North America holds the largest revenue share of the industry with over 80% of the market in 2019. To emphasis the possible growth of the cannabis industry the U.S. market was valued at $11.3 billion in 2018. Provided that analyst predictions are correct the U.S. marijuana market could reach $35 billion by 2025. Given that type of growth, the cannabis industry could be a good emerging market for investors to find value in.
For this reason, investors should do their due diligence on the best marijuana stocks to buy that add value to their portfolio. Following cannabis stocks closely can give investors an idea of how much market volatility to expect from certain pot stocks. With the intention of finding possible pot stocks for your marijuana stock list let’s look into some leading cannabis companies.
Marijuana Stock to Buy or [Sell]: Canopy Growth Corporation
Canopy Growth Corporation (CGC Stock Report) is currently the largest Canadian cannabis company by market cap, and the biggest pot stock in the world. The company will release its second-quarter fiscal 2021 results premarket on November 9th. Recently Canopy’s fiscal Q1 results beat estimates due to new leadership consolidating operations from previous expansion attempts. Although the company said it lost market share and store traffic in Q4 due to the pandemic, current plans to build 10 new dispensaries in Alberta Canada are underway. Alberta is the province with the most marijuana dispensaries in Canada.
While Canopy is in a good cash position because of the $4 billion investment from Constellation Brands (STZ Stock Report), still no profits have come from it. Although the cash gives the company the ability to survive the pandemic, what makes CGC stock a possible marijuana stock to buy?
Canopy Growths Future Prospects
For one Canopy seems to be doing everything it can to align its production with demand and lower cost. Another interesting development with the company is its execution of an agreement with Acreage Holdings (ACRHF Stock Report). Acreage is a U.S. multistate operator that would give Canopy Growth a direct path into the U.S. cannabis industry. In fact, the two companies have announced the release of Canopy’s THC infused beverages in the U.S. in 2021.
Also, the company is leveraging its relationship with Constellation Brands by developing partnerships with alcohol distributors like Reyes Beer Division and Manhattan Beer. While this partnership currently is for Canopy’s energy drink line it establishes distribution in the market for future products. When taking into account how well Canopy is positioned to profit off the North American marijuana industry the future looks promising. Watch for Canopy to continue on its path to profitability as seems to be heading in the right direction.
Marijuana Stock to Buy or [Sell]: GrowGeneration Corp.
GrowGeneration Corp. (GRWG Stock Report) is the nation’s largest chain of hydroponic and organic garden supplies in the U.S. Well-positioned to capitalize on the cannabis industry the company carries a variety of brands and is a leader in large scale grow operations. Earlier today the company announced the signing of an assets purchase agreement with The GrowBiz. GrowBiz is the nation’s third-largest hydroponic gardening supply store with 5 locations across California and Oregon. The newly acquired company is expected to generate about $50 million in annual revenue.
GRWR stock has performed well in 2020 up over 100% since mid-August. In addition, the stocks YTD high $22.02 on August 19th is close to its current trading price of $18.15. As its market cap approaches $900 million look for the company to establish its brand amongst others in the grow sector like Scott Miracle Gro Company (SMG Stock Report). In any case this ancillary marijuana stock is good addition to your marijuana stock list.
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