What the Best Case Scenario is For the Future of Pot Stocks
Marijuana stocks have been quite popular for a few years at this time. While the cannabis industry still very much is in its infancy, there is a lot to look forward to. Major pot stocks like GW Pharmaceuticals Inc. (GWPH Stock Report), Curaleaf Holdings Inc. (CURLF Stock Report) and Trulieve Cannabis Corp. (TCNNF Stock Report) are working hard to secure their own futures in the cannabis industry. With 33 states in the U.S. having legal cannabis plus Washington D.C., the U.S. cannabis industry has seen great critical appeal in the past twelve months. But, in order to see the industry reach its full success, a lot needs to change.
For some context, we should take a look at the cannabis industry from a broad perspective. Within marijuana stocks, there are a few specific categories. At the top, we have the pure play pot stocks. These are companies that produce large quantities of marijuana to be sold retail or wholesale. Next, we have pharmaceutical pot stocks, MSOs and ESPs. These could range from companies like Valens Corp. (VLNCF Stock Report) all the way to Corbus Pharmaceuticals Inc. (CRBP Stock Report). Lastly, we have ancillary marijuana stocks. With this in mind, let’s take a look at how the future of the cannabis industry is changing.
The Cannabis Industry From a Broad Scope
In the next few years, many cannabis stock investors hope that laws will change. This specifically pertains to the U.S. where cannabis is still federally illegal. Estimates have shown that if the U.S. were to legalize cannabis, the industry could be worth as much as $50 billion in the next few years following the legislation. Globally, estimates have stated that the cannabis industry could be worth around $100 billion in the next decade if all things go according to plan. While the U.S. and Canada are the main focal points of the cannabis industry, other countries are joining in.
This includes countries in Europe like Germany as well as others around the world like Israel and Jamaica. While it may seem like the industry is small, the real growth potential is in the long term. The states and countries that have legal cannabis now, are helping to create a long term domino effect around the world. Because of the massive tax revenue that can come from a legal cannabis industry, many states in the U.S. are working to put in new legislation. This includes five states that will be voting on whether or not to legalize cannabis on November 3rd. With this in mind, the cannabis industry looks like it is on track to continue growing substantially into the future.
Understanding Pure Play Pot Stocks
The pure play pot stock area of the cannabis industry is one of the most important overall. This is because these companies have grown to be the largest amongst all marijuana stocks. With that, they have also become the most forward facing marijuana stocks in the industry. In Canada, we have seen these companies miscalculate the demand and production needs for marijuana in 2020. This helped to show that there are some avoidable issues that can arise when estimates are incorrect. But, it also helped to bring down the sky high valuations of some major Canadian marijuana stocks.
Because of the legislation surrounding cannabis in the U.S., it has been more difficult for U.S. based pot stocks to succeed. This is not to say that they haven’t succeeded, but rather they have had a much tougher time than our neighbors to the North. The way it is, there are two types of pure play pot stocks. On one hand, we have the low cost, high production business model. On the other hand, there are the premium cannabis producers. Both have value in the cannabis industry, and both have seen success in their respective markets. With this in mind, the future of the cannabis industry could benefit pure play pot stocks on a big level if legislation begins to work in their favor.
What Can Investors Hope for in the Next Few Years?
With the election coming up in the U.S., investors should be hopeful for the future of the cannabis industry. With five states voting on whether or not to legalize cannabis, there is a lot on the line. But regardless of the outcome of this election, investors strongly believe in the future of the cannabis industry. In the past, unjust legislation has only slowed down growth, rather than shuttering it completely. Because of this, all we can do as investors is get out there and vote, and then work to find value amongst certain marijuana stocks. As always, the hopes are high that the future continues to hold growth for the cannabis industry at large.