Cannabis Investing

Canada’s legalization of marijuana for recreational occurs October 17, 2018. That should boost marijuana production and sales—and the appeal of marijuana stocks for investors. However, even for aggressive investors, it’s important to understand the risks of investing in marijuana stocks.

The speculative appeal of Canadian marijuana stocks continues to attract investors looking for a “ground-floor opportunity.” However, the pioneers in an industry are not always the ones who survive.

There are also low barriers to entry for new competitors—and those barriers just got lower with the announcement by the federal government that it will let large cannabis producers start growing crops outdoors. That introduces a new, cheaper supply of marijuana that will compete with established indoor producers who have invested billions in greenhouses and other indoor facilities.

The government feels the new source of supply will help suppress the illegal black market for cannabis. Established indoor producers lobbied against outdoor growing, citing the risk of theft, contamination from pesticides from adjacent fields and the pungent smell of cannabis plants during flowering.

Longer term, if demand grows large and profitable enough, major agricultural and drug companies, as well as tobacco firms, are likely to enter the field and take sales away from existing growers.

Shares of many marijuana stocks may move higher as momentum traders buy the widely followed stocks on the latest upswing. However considering their current sales, many Canadian producers have very high “market caps” (the value of all shares outstanding). That means they need huge revenue growth even to justify their current stock prices. If revenues merely hold steady or rise only slowly, their stock prices will be vulnerable.

Note, too, that strong investor interest in any new area also attracts penny stock spammers—and marijuana stocks are no exception. The upcoming market boom following legalization could bring about a new wave of these penny promotions.

Our special report gives you analysis of Canada’s leading marijuana stocks today—as well as ways to profit from the marijuana boom that are very different from what many investors are thinking. Read our special free report, The Highs and Lows of Marijuana Stocks.

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Cannabis Investing Post Archives

How Metro Inc. plans to use cannabis to reward investors

How Metro Inc. plans to use cannabis to reward investors

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Cannabis-Connected

Licences for medical and recreational marijuana are potential revenue streams for this Canadian grocery chain that also owns pharmacies. And meanwhile, it’s already selling hemp-based foods and nutritional supplements

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Think you know all about Marijuana and Investing?
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How soon marijuana companies will earn profits is far from certain—but when they do, it could add an unexpected risk factor

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Investment Outlook

Profits are better than losses. But when a company becomes profitable, it faces a new risk: the unexpected earnings downturn. That risk is amplified for marijuana stocks.

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Cannabis in the news October 2, 2019

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News on cannabis stocks and on developments in the industry haven’t let up in today’s volatile markets. Here are this week’s stories that we believe will mean the most to you as a Canadian investor.

1. Canada’s cannabis sector contributed $8.26 billion to… Read More

Rite Aid Corp’s CBD products are a plus

Rite Aid Corp’s CBD products are a plus

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Cannabis-Connected

This major U.S. drugstore chain has begun selling CBD (cannabidiol) skin creams, lotions and lip balms in Oregon and Washington State. The firm hopes to expand these sales as more U.S. states legalize cannabis. Meanwhile, it’s losing money and has huge debt.

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Cannabis investors beware of p/e ratio

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Investment Outlook

Just because a marijuana company starts earning profits doesn’t mean it suddenly represents good value for investors. Here’s what you need to about when a former money-loser finally starts making money.

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As developments come thick and fast with marijuana stocks, reliable… Read More

Shopify Inc. helps cannabis firms sell their products

Shopify Inc. helps cannabis firms sell their products

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Cannabis-Connected

Merchants of all sizes gain from this Canadian firm’s software for designing, setting up and managing online selling. Among them are a number of prominent cannabis producers and provincial government retailers. 

YOUR MARIJUANA I.Q.
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Second Cup Ltd. looks to cannabis for growth

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Cannabis-Connected

This owner of  specialty coffee shops hopes to rebound by branching out into cannabis retailing. It’s also conducting a strategic review of its operations, which could lead to the sale of company.

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Eve & Co. focuses on key demographic

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Marijuana Producer

This marijuana grower keeps adding capacity as it focuses on its unique offerings such as cosmetics and health products.

SPECIAL MESSAGE
To see where the biggest value is hiding in today’s markets you need… Read More