Marijuana stocks have had a great year, to say the least, as most have at least doubled if not more than tripled in value. While a bullish market has pushed these stocks higher, there are several other reasons behind this year’s marijuana rally.
The rapid sales growth of the industry has attracted investors from all around the globe. Regardless of the source, analysts forecast substantial annual growth from the legal marijuana industry. Marijuana research firm, ArcView has predicted North American legal marijuana sales to grow twenty-six percent annually between 2016 and 2021. If this estimate is correct, the North American market would generate nearly $22 billion annually in sales. Cowen & Co. went a step further. The investment firm believes that by 2026, U.S. marijuana sales will reach around $50 billion. The rapid growth of the industry is hard to ignore, which is why investors continue to dig deeper into their pockets for marijuana stocks.
The marijuana industry continues to expand all over the world. In the United States, West Virginia became the 29th state to legalize medical marijuana and Nevada had legalized recreational marijuana. Mexican President Enrique Pena Nieto signed a bill into law that legalized medical marijuana, leaving the U.S as the only country in North America that hasn’t legalized medical marijuana. Germany launched medical marijuana laws and began importing it into the country for eligible patients. Many other countries are making headway into changing their marijuana laws, and as they do profitability increases for marijuana stocks.
Perhaps the most notable reason that drove marijuana stocks higher this year is the anticipation of our neighbors to the north, Canada, legalizing recreational marijuana this upcoming July. Canadian Prime Minister Justin Trudeau stuck his pledge during his campaign and introduced legislation to legalize recreational marijuana. It has been estimated that Canadian recreational legalization could generate an additional $3.7 billion to $5 billion annually in sales.
Canadian marijuana producers have been prepping themselves to reap the profits of the recreational market all year by expanding their production capacities. With heavy market momentum, marijuana stock investors are looking forward to ringing in the new year with marijuana stocks in the portfolios.
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