Why 2021 Could Be an Even Better Year for Marijuana Stocks

marijuana stocks 2021Marijuana Stocks in 2021

There has been a lot of movement in the legal cannabis industry in 2021. Marijuana stocks have been on the rise since the year began. Positive energy built around the Joe Biden administration and a Democratic Party being in control of Congress that has never been more pro-pot.

But with American politics the way they are now, it looks like we’re not going to see much action on U.S. marijuana legalization anytime soon. That doesn’t mean 2021 is going to be a poor year for pot stocks. Quite the contrary, things are looking up for the marijuana industry in general.

As much as the global COVID-19 pandemic has done damage to the marijuana market, there may actually have been one major benefit: pot acceptance has been soaring.

You see, marijuana use has actually gone way up during the pandemic. According to a Canadian study, during the first wave of the pandemic, about half of all marijuana users increased their marijuana consumption in a given week. (Source: “Half of Cannabis Users Increased Consumption During First Wave of COVID-19,” Centre for Addiction and Mental Health, January 13, 2021.)

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This makes a lot of sense. After all, one thing I’ve been predicting since the pandemic started was that, no matter what happened to the supply chain (which was, of course, disrupted by COVID-19), vice goods have traditionally gone up during downturns, recessions, and other tough times.

Marijuana, as I suspected, hasn’t been much different. More people have been using marijuana as we’ve endured a seemingly endless string of lockdowns and pandemic scares.

Increased marijuana sales translate into higher revenue, and eventually higher profits. That, in turn, will lead to an increased interest in marijuana stocks. After all, the marijuana industry is already billions of dollars in size; the large majority of that money, however, is still locked up in the black market. So there are opportunities for the legal market to grow.

Better yet, the increased marijuana habits may hold past the pandemic. In other words, there’s a decent chance that as people get used to consuming pot more regularly (due to the pandemic), they may continue to consume it at a high rate that not only destigmatizes the drug, but also boosts profits.

Remember that cannabis has been illegal for so long that many people are reluctant to try it for the first time when it becomes legal. But as more and more people get used to seeing others become routine pot users, it may encourage them to give the drug a try, opening up the market to new users.

What’s more, as newer and less-intimidating cannabis products hit the market—think cannabidiol (CBD) and cannabis-infused beverages—that will likely open up the market to more consumers.

Overall, the future of the marijuana market looks fairly bright. We can anticipate more people being willing to give pot a chance, while routine users may increase their habits as the drug becomes more accepted during the ongoing pandemic.

What’s Happened With Pot Stocks This Year

With all the good factors supporting marijuana stocks in 2021, we also have to understand the forces working against the industry.

The largest one by far is U.S. political gridlock. While the industry is massive and set to grow, investors are still hung up on U.S. marijuana legalization. The issue is that the country is lagging in regards to federal movement on pot legalization.

While the majority of the U.S. population supports pot legalization in one form or another, politicians in both major parties are hardly reflective of that. Unfortunately, this dissonance in American politics is hardly unique to marijuana—and not likely to change anytime soon.

Couple that with the fact that President Biden isn’t pro-legalization, and you have a rough situation on the political front for the next four years.

On top of that, there’s the massive political polarization between the two parties that makes it impossible for them to agree on any subject, let alone work together on an issue that could genuinely be a bipartisan issue.

After all, there are many Republican and Democratic politicians who support pot legalization. But the chances of them coming together to work on a bill is next to nothing.

The flip side is that U.S. marijuana legalization is inevitable; it’s just a matter of when. And marijuana stock investors who get in early enough will be able to profit for years as the industry grows and the country inches toward federal legalization.

Then, when federal U.S. marijuana legalization does finally hit, we can expect pot stocks to skyrocket.

This makes investing early in the pot industry, in anticipation of predictable growth and the certainty of legalization, potentially one of the most profitable investments out there right now.

Analyst Take

The future is bright for marijuana stocks, no matter what happens in politics in the coming years.

There’s little debate in just how large the cannabis market can grow. Instead, much of the debate is centered on when federal U.S. marijuana legalization will arrive.

In anticipation of that eventuality, many people are making long-term pot stock investments. And that leaves the market ripe with opportunity for those willing to bear the uncertainty.