Marijuana Quarterly Reports and U.S. Marijuana Legalization Are the Two Biggest Factors for Pot Stocks in 2019

Marijuana Quarterly Reports and U.S. Marijuana Legalization Are the Two Biggest Factors for Pot Stocks in 2019
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Marijuana Stocks in 2019

The marijuana industry in 2019 has been on a huge run to start the year. Pot stocks are up big over the past few months, and that’s without something like Canadian marijuana legalization or industry-altering partnerships to spur growth. So what is motivating the climb of marijuana stocks in 2019? Two things: marijuana quarterly reports and U.S. marijuana legalization.

As the year goes on, these two factors will likely be the biggest reasons (barring something unforeseen, like another huge partnership) for marijuana stock growth.

Marijuana Quarterly Reports

Marijuana quarterly reports have been huge for the marijuana industry in 2019.

With legalized Canadian pot sales finally on the books, we’re seeing huge growth in revenue across the board…sometimes by as much as 1,000%. Growth was to be expected, but the numbers so far have been very promising.

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Not every company has seen the same huge rise in share prices following its quarterly report, but the earnings have been near-universally positive and helped push stock prices higher.

This is very important for marijuana stocks going forward.

Up to this point, their growth had been hitched to hype and possibility; what the industry could be worth. Now, however, we’re getting our first concrete glimpse of what the industry is worth. So far, the results have been positive.

And the best part is that growth is only likely to continue as the year carries on.

After all, the Canadian marijuana industry is still in its infancy. Supply shortages, overbearing regulation, slow rollouts…these have all played a role in hampering marijuana sales. As these problems are remedied, expect to see sales continue to increase and, as a result, strong quarterly reports release and spur stock growth.

For instance, Ontario (the largest and richest province in Canada) has yet to open a marijuana storefront. That will change in April, and again likely help with marijuana stock growth.

Edibles are also set to be legalized by the end of 2019, another reason that Canadian marijuana sales are likely to grow.

Quarterly reports also offer marijuana stocks a chance to prove themselves as legitimate.

Tilray Inc (NASDAQ:TLRY) has largely grown as a result of its early-day hype, being the first marijuana initial public offering (IPO) on the Nasdaq. It gained over 1,000% in a short period of time but has since been on a steady tumble from that peak. And that’s largely because the company is seen as running on hype.

Tilray’s first quarterly report post-legalization is set to release on March 18 and will be a huge do-or-die moment for the company. It can finally prove that there’s substance to this company with strong sales numbers. Or, conversely, it will prove the doubters right with weaker-than-expected sales.

I, myself, believe it will likely impress with its quarterly report. Long-term, however, I don’t have as much faith in TLRY stock as I do in its competitors, many of which have better partnerships, supply agreements, supply capacities, and overall better fundamentals than Tilray.

Still, day traders will likely be able to take advantage of the upcoming quarterly report.

All that is to say that marijuana quarterly reports are going to be huge for marijuana stocks in 2019.

U.S. Marijuana Legalization

The other huge win for marijuana stocks in 2019 has been the progress made toward U.S. marijuana legalization.

First, the presidential election in 2020 is going to be the first one in modern U.S. history where each candidate has expressed some manner of support for marijuana reform.

On the Democrat side, we have every major presidential hopeful supporting marijuana reform—with U.S. marijuana legalization likely not being that far from their minds.

On the Republican side, you have Donald Trump, a president who has expressed, at worst, indifference and, at best, support for pot reform. At the very least, he has promised to leave it up to the states and has not come out with a fervent rebuke of marijuana legalization.

Pile that on top of huge job growth numbers in the marijuana industry—job growth so great, in fact, that it’s leading all industries for job creation in the U.S.—and huge tax revenues for the states that have legalized marijuana, and you have a perfect storm for marijuana bulls.

Marijuana legalization in the U.S. used to be something that we projected several years out from now. My worst projections had U.S. pot legalization coming in the late 2020s. But with all the progress we’ve made, I believe it’s very possible that we see U.S. marijuana legalization during the next presidency.

It would take a Democrat win, but the majority of Americans already support marijuana reform in one form or another. With that kind of support and with strong job and tax revenue numbers, it’s a pretty potent political argument that will be hard to refute by marijuana naysayers.

And, of course, as soon as marijuana legalization in the U.S. is announced, marijuana stocks across the board will surge dramatically.

The future, in other words, is extremely bright for marijuana stocks.

Analyst Take

There was a concern that without Canadian legalization on the horizon, marijuana stocks in 2019 would take a step back—the opposite has been true so far.

In fact, in many ways, 2019 is a far superior year to 2018.

Last year started off with a marijuana correction, while 2019 has seen pot stocks swell by dozens of points across many companies.

Between the gains made on sales and toward marijuana legalization in the U.S., marijuana stocks in 2019 seem poised for a great year.

Marijuana quarterly reports are likely to continue to spur growth moving forward, and the push for pot legalization in the U.S. is only going to grow stronger; 2019 is shaping up to be a very strong year for the marijuana industry.