By: Ian Cooper
For most of 2018, marijuana stocks were the hottest opportunities around.
• Canopy Growth (CGC) ran from $20 to $57
• Tilray Inc. (TLRY) ran from $20 to $300
• OrganiGram Holdings (OGRMF) ran from $3 to $6.75
• Marijuana ETF, MJ ran from $26 to more than $44
All on anticipatory momentum as we neared Canadian approval this month. However, once the news was out, related stocks began to pull back on a “sell the news” reaction.
Once an expected catalyst is out, these are to be expected.
However, don’t count out marijuana stocks so fast, though. The catalysts ahead are monumental.
One – Americans Greatly Support its Legalization
A growing majority of Americans fully support its legalization, which has led to its decriminalization and the potential for significant cash inflows. In fact, 66% of Americans now support legalizing marijuana, another new high in Gallup's trend. The latest figure marks the third consecutive year that support has increased.
Already, nine states and D.C. have legalized marijuana for recreational use.
As more states move to legalize its use, sales will skyrocket, in our opinion.
Two – Canada is Only the Start of the Boom
On October 17, 2018, marijuana became legal in Canada. But no one expected the demand to be as strong as it’s been. In fact, according to Fortune, the country can’t keep up with the pace of demand. Retail shops are nearly sold out.
It’s gotten so bad that stores have closed until the supply problem is fixed.
By 2021 analysts say Canada could have nearly four million recreational marijuana users, creating a monstrous $4.5 billion industry. The industry could balloon to $8.7 billion shortly thereafter, as marijuana retail sales just in Canada are likely to surpass beer, wine and spirit sales combined. That’s big money.
Three – Corporate America is on Board with Marijuana
As sales of beer fall in the United States, brewers have begun to bet that legalization of marijuana around the globe, especially the United States, will continue to build momentum and sales of cannabis products will take off.
Molson Coors for example listed legal cannabis among the biggest possible risks to its business in its annual shareholder report.
Even Bill Gates’ Microsoft jumped into the cannabis business on the software side, partnering with Kind Financial. The software will give governments and business owners a way to monitor the distribution of cannabis "from seed to sale" and ensure compliance.
Hewlett-Packard powers the Flowhub cannabis compliance solutions, too. Flowhub’s product not only provides business management and transactional processing tools for retail stores but also workflow focused on compliance, regulatory and reporting rules of marijuana dispensaries.
However, this is – we believe – is only the start. Pay close attention to this space.