By: Ian Cooper
Controversial or not, it’s been tough to ignore the marijuana stock rally.
Canopy Growth CGC ran from $12 to $57
Tilray Inc. TLRY ran from $30 to $300
OrganiGram Holdings OGRMF ran from $2.25 to $6
Aphria Inc. APHQF ran from $$7 to $17
Marijuana ETF, MJ just ran from $26 to more than $44
But the boom may have just begun.
On October 17, 2018, Canada will legalize marijuana, flooding smart investors with opportunity.
Just think about what that could do for sales.
Even without the U.S. fully on board with legalization (yet), sales in North America have been incredibly higher. In 2017, legal sales were up to $9.7 billion – a 33% increase from 2016. Going forward, the market could grow at a CAGR of nearly 35% over the next five years.
The legalization of recreational marijuana just in Canada is expected to generate $5 billion in sales. The industry could balloon to $8.7 billion shortly after, as marijuana retail sales just in Canada are likely to surpass beer, wine and spirit sales combined.
However, some analysts believe even those predictions are too low. In fact, according to Oracle Poll Research, Canada could see more than 11 million marijuana users by 2021 instead of 5.2 million, which could produce between $8 billion and $12 billion in annual sales.
But that’s not the only reason to like these stocks.
U.S. states are pushing for further acceptance. Polls show that Americans highly favor its legalization at 61%. Even corporate America has woken up to the opportunity. In fact, Coca-Cola may be looking to get into the pot-infused drink business. Beer companies like Constellation Brands just invested $4 billion in Canopy Growth.
Constellation Brands invested $4 billion in Canopy Growth. That’s as more consumers begin to reduce their overall alcohol intake in favor of marijuana.
“We believe alcohol could be under pressure for the next decade, based on our data analysis covering 80 years of alcohol and 35 years of cannabis incidence in the US,” analysts at Cowen noted, as quoted by CNBC. “Since 1980, we have seen 3 distinct substitution cycles between alcohol and cannabis; we are entering another cycle.”
According to Pot Network:
Molson Coors is chatting with pot stocks about creating cannabis-infused beers. The recreational market is anticipated to erupt in North America come October, and the beer and alcohol industry is looking to take the biggest hit. Molson Coors is not the first brewing company to take a closer look at cannabis. After their Canadian sales dropped more than 2% last year, the brewer is looking to partner with a cannabis producer.
Even Coca-Cola showed interest.
"Along with many others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world," Coca-Cola said, as quoted by CNBC. "No decisions have been made at this time," adding that it would not comment on further speculation.
Analysts say that by 2030, pot sales could eclipse U.S. soda sales.
In fact, according to Business Insider, “Legal marijuana could soon become a bigger industry than soda, and it has already started putting pressure on alcohol sales, according to the investment bank Cowen. If marijuana is made legal nationwide in the US by 2030, the legal weed industry could generate $75 billion in sales by that year.”