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

Cannabis in the news March 20, 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 most to you as a Canadian investor.

1. The U.S. federal government’s move to decriminalize hemp… Read More

Pharmacy chain taps medical cannabis demand

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Cannabis-Connected

Even though it won’t carry cannabis directly, the owner of this leading chain of drugstores is now helping to connect registered prescription holders with cannabis growers. At the same time, it’s building relationships by offering guidance on marijuana use.

YOUR MARIJUANA I.Q.
Think you… Read More

Cannabis in the news March 6, 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 most to you as a Canadian investor.

1. In a sign of the industry’s global potential,… Read More

Convenience store chain gains cannabis exposure

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Cannabis-Connected

This chain’s experience with other age-restricted products such as tobacco and alcohol position it to help the operator for one of Ontario’s 25 cannabis retail licensees, when they open in April. Through a partnership deal with a major marijuana producer, the company… Read More

Profits may put more pressure on cannabis stocks

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Investment Outlook

As the cannabis industry matures, you’ll need to understand how a key performance ratio works and how it’s likely to impact investor expectations for the industry’s top producers.

FREE REPORT
As developments come thick and fast with marijuana stocks, reliable research and recommendations… Read More

Major cannabis producer set to add edibles

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Marijuana Producer

Partnerships with the world’s leading brewer and a global leader in generic pharmaceuticals will create an expanded medical marijuana product line for this well-known cannabis company. The firm seeks to generate the… Read More

Cannabis performance at a glance

The HORIZONS MARIJUANA LIFE SCIENCES ETF (Toronto symbol HMMJ) invests in North American firms that are legally involved in the cannabis industry. Canadian companies—including Aurora Cannabis (11.8% of assets) and Canopy Growth (11.0%)—make up 80% of the portfolio. As such the fund’s performance—specifically, its Daily… Read More

Outsized market caps carry risk

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Investment Outlook

Modest profits—if any profits at all—have done little to keep most cannabis companies from amassing sky-high market caps. It’s a risk factor that Successful Investors can’t ignore.

FREE REPORT
As developments come thick and fast with marijuana stocks, reliable research and recommendations are… Read More