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

This big bank taps cannabis industry growth

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Cannabis-Connected

While some of Canada’s banks were initially reluctant to participate in cannabis company financing, this institution has actively helped to facilitate large industry deals. At the same time, a key U.S. acquisition lets the bank benefit from the strong U.S. economy. In… Read More

Coffee chain well-placed to tap key market

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Cannabis-Connected

This Canadian coffee chain with 270 locations has formed an alliance with an operator of medical cannabis clinics. The deal could see the company tap consumer demand for edibles when the federal government legalizes that profitable segment of the market in the… Read More

Cannabis in the news January 30, 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. Private sellers in Canada’s fledgling cannabis industry continue to… Read More

Boost in research spending will pay off

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Cannabis-Connected

This company is set to add to its steadily increasing profits with special equipment to help cannabis producers maximize their yields.

The industry is struggling to boost its output to meet high demand, so this firm’s focus on improving its equipment—it raised its… Read More

Know when to sell marijuana stocks

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Investment Outlook

You should be quicker to sell aggressive stocks—and cannabis producers certainly fall into that category—than conservative ones. Consider our sell-half rule.

FREE REPORT
As developments come thick and fast with marijuana stocks, reliable research and recommendations are more important than ever.
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Cannabis in the news January 23, 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. Canada’s leading producers continue their buying spree, with Tilray… Read More