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
One of Canada’s biggest marijuana growers now owns 25% of this liquor store operator. Together, they aim to keep opening more cannabis stores across Canada as the cannabis supply situation improves. This should help the retailer offset slowing liquor sales.
YOUR MARIJUANA I.Q.
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Investment Outlook
Our simple rules help you decide when to bail out of aggressive stocks such as marijuana growers and related firms. These can help you avoid losses on overpriced stocks which have run up too quickly on hype and speculation.
FREE REPORT
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Marijuana Producer
If demand for higher-profit-margin marijuana edibles, tinctures, softgels, vape pens and so on continues to rise, this company is well positioned to profit. Meanwhile, though, it could face new competition from bigger… 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. Does cannabis cause psychosis? Evidence is lacking, scientists say.
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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.
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Cannabis-Connected
This beverage company continues to grow rapidly by acquisitions. This has expanded its range of products using natural and organic ingredients—and it now aims to use its latest purchase to add CBD-infused drinks under a well-known brand name.
YOUR MARIJUANA I.Q.
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Investment Outlook
With recreational cannabis now legal in Canada, at some point, producers will start showing small profits. But when former money-losers finally start making money, the “handcuffs” go on
FREE REPORT
As developments come thick and fast with marijuana stocks, reliable research and recommendations… Read More
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Marijuana Producer
Expansion through bigger growing facilities, competitor acquisitions, e-commerce and both local and international partnerships mean this marijuana company is working hard to grow its business
SPECIAL MESSAGE
To see where the biggest value is… 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. The upcoming legalization of cannabis edibles this fall… Read More
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Cannabis-Connected
The global market for cannabis testing equipment is projected to rise from $824 million U.S. in 2016 to around $2.2 billion U.S. by 2025. That should provide lots of growth opportunities for this testing-equipment manufacturer as its rising research and development spending… Read More
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Investment Outlook
You need to understand the risks when investing in cannabis stocks and how to mitigate the resulting risk to your portfolio. Our three-part Successful Investor approach focuses on helping you limit exposure to the industry’s most-aggressive stocks.
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Marijuana Producer
Cannabis pharmaceutical growers dominate this marijuana ETF, although it also holds a diversity of other industry firms, from bio-pharmaceutical companies to support firms offering lighting technology and fertilizers. The fund currently pays… Read More
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Investment Outlook
Canada’s marijuana companies are now dealing with the pros and cons of regional diversification. That includes expansion by acquisition and the risks associated with that strategy.
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Canadian veterinarians are now lobbying the federal government… Read More
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Marijuana Producer
A network of medical cannabis clinics and an exclusive telemedicine app are part of the expansion plans of this Ontario marijuana producer focused on premium brands and unique markets.
SPECIAL MESSAGE
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Cannabis-Connected
This major beer producer has formed a joint venture to create and market cannabis-infused non-alcoholic beverages. While it saw earnings rise in the recent quarter, it’s also counting on its cannabis deal to bolster future revenue and profits.
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Cannabis-Connected
This company’s expertise in specialty fertilizers, “grow lighting” and other supplies for hydroponics should help grow sales as more U.S. states legalize cannabis. The stock trades at 21.5 times its 2019 earnings forecast while offering investors a 2.4% yield.
YOUR MARIJUANA I.Q.
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Investment Outlook
Cannabis penny stocks aim to offer a big payday for aggressive investors, but the odds against success are high. Following our straightforward rules for minimizing risks should help you avoid the worst marijuana penny problems.
FREE REPORT
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The country’s cannabis retailers are already grappling with… Read More
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Marijuana Producer
Female-focused marijuana products, including cannabis-infused wines, cosmetics, beauty lotions and menstrual health products, could give this startup an edge over larger competitors.
SPECIAL MESSAGE
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