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

Risk of failure is high with marijuana penny stocks

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Investment Outlook

Trying to find “up-and-coming” cannabis stocks by investing in marijuana penny stocks carries high risk, especially since many are likely little more than stock promotions.

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

Cannabis in the news January 3, 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 the stories that we believe will mean most to you as a Canadian investor.

1. The federal government’s proposed regulations for the sale of… 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 (12.1% of assets) and Canopy Growth (11.0%)—make up 80% of the portfolio. As such the fund’s performance—specifically, its Daily… Read More

TSI Cannabis Quality Rating System

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To determine the investment quality rating for any cannabis producer, we weigh a range of factors in order to establish our Cannabis Quality Rating (CQR).

All told, we look at 13 factors in determining the quality rating of a marijuana stock:

13 QUALITY FACTORS

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Canada’s new marijuana laws don’t make Canadian Marijuana stocks a ‘buy’

Canada’s new marijuana laws don’t make Canadian Marijuana stocks a ‘buy’

Why decriminalization of marijuana and investment by big Canadian names doesn’t change our opinion of Canadian Marijuana stocks
Interest in Canadian marijuana stocks stems from last fall’s legalization of recreational cannabis. Today, investors continue to search for ways to tap in to those sales and profit from future growth. The federal government’s legislation has… Read More