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-Connected
This international producer and marketer of beer, wine and spirits is readying for the introduction of its cannabis-infused, non-alcoholic drink when “edibles” become legal later this year. But it still continues to streamline its core operations.
YOUR MARIJUANA I.Q.
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Marijuana Producer
Sales are up 304.6%, but this ambitious cannabis firm still needs huge future revenue growth to justify its big market cap. It’s looking to achieve that goal through a variety of strategic… Read More
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Investment Outlook
Once a marijuana company begins showing small profits—and a positive p/e—the “handcuffs” go on.
FREE REPORT
As developments come thick and fast with marijuana stocks, reliable research and recommendations are more important than ever.
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Marijuana Producer
Cannabis extraction services, lab testing and consulting, and large-scale indoor marijuana farming each offer growth potential through strategic partnerships with larger firms. At the same time, the company’s valuation is more realistic… Read More
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Investment Outlook
Are there reasons to be wary of the risk posed by many marijuana stocks available on the market today? Yes, and here are a couple of factors you need to be aware of when considering investing in cannabis shares.
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Cannabis-Connected
Through its drug stores, this grocer has expanded into online cannabis sales to registered prescription patients who can get their orders home-delivered or at their doctor’s office. A software partnership should also let the company offer more secure personalized medical marijuana sales.
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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 United Nations’ latest world drug report shows… Read More
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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. Members of Saskatchewan’s cannabis community are cautioning consumers… Read More
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Cannabis-Connected
This multi-industry manufacturing company thinks that one of its new products will be of special interest to cannabis sellers. This is just part of its strategic re-positioning into higher-profit-margin products.
YOUR MARIJUANA I.Q.
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Investment Outlook
Our five rules for penny stock investing apply to marijuana stocks too. These rules can help cut your risk and keep you away from the worst pennies—those with great concepts, but little hope for future success.
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As developments come thick and… Read More
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Marijuana Producer
The competition will continue to increase as this cannabis company aims for its first revenues. Meanwhile, it plans to aggressively expand its growing facilities
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1. A building inventory of unsold cannabis could lead… Read More
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Cannabis-Connected
This multi-industry manufacturing company thinks that one of its new products will be of special interest to cannabis sellers. This is just part of its strategic re-positioning into higher-profit-margin products.
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Think you know all about Marijuana and Investing?
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Investment Outlook
Marijuana growing companies can lower their geographic risk both nationally and internationally to limit the risk of any one government adversely affecting their overall businesses.
FREE REPORT
As developments come thick and fast with marijuana stocks, reliable research and recommendations are more important… Read More
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Marijuana Producer
A joint venture with a large generic pharmaceutical manufacturer, plus partnerships with a variety of smaller international distributors and sellers, fits with this medical cannabis producer’s domestic Canadian growth plans.
SPECIAL MESSAGE
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Cannabis-Connected
This well-known Canadian bank has broken ranks with some other banks by lending money to licensed cannabis producers in Canada. It also plans to lend to U.S. cannabis producers if federal legislation there makes it possible. Meanwhile its quarterly revenue is up… Read More
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Investment Outlook
Growth by acquisition is riskier than internal growth for a variety of reasons. But cannabis producers seem willing to bear those risks to grow more quickly than the competition both domestically and internationally.
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Marijuana Producer
Demand for this company’s purified cannabis oil and concentrate extraction services keeps rising as it signs five new processing agreements. Its goal is to become a profitable industry leader in cannabis extraction
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The HORIZONS MARIJUANA LIFE SCIENCES ETF (Toronto symbol HMMJ) invests in North American firms that are legally involved in the cannabis industry. Canadian-listed companies—including Canopy Growth (12.3%) and Aurora Cannabis (10.6% of assets)—make up 80% of the portfolio. As such the fund’s performance—specifically, its Daily… Read More
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