Marijuana Sales Set to Boom by 2026
One of the preferred ways to play the marijuana market is the long game. Right now, everything is running on potential. Sure, you have your solid returns on medical marijuana sales, but the best marijuana stocks are the ones gearing up for mass-market legalization, poised to be accessible by a huge swath of the population that right now has to turn to illicit means in order to indulge in the green herb.
A Cowen and Co. report stated that the marijuana market will be valued at $50.0 billion by 2026. (Source: “Legal marijuana expected to pose threat to $200 billion alcohol industry,” MarketWatch, September 23, 2016.)
That’s a huge growth rate compared to current marijuana sales, which came in around $6.7 billion in 2016 in North America, according to a report from ArcView Market Research. (Source: “Marijuana Sales Totaled $6.7 Billion In 2016,” Forbes, January 3, 2017.)
Consider that the amount of growth the marijuana market is currently experiencing and will likely continue to experience as more countries like Canada and states within the U.S. turn to weed legalization is similar to some of the biggest industry booms of our lifetimes.
Projected growth for the industry is larger and faster than even the boom time of the dot-com era (of course, hopefully with a different ending). Cable television in the 1990s had similar growth rates, and so did broadband Internet in the 2000s, but aside from those massive industries, you rarely see markets with such strong sales growing at such a rapid pace.
And that’s why the long game is looking more and more appealing to many investors. Quick trades and other investments of that nature can reap huge rewards but are stressful and, by their nature, very competitive. Massive swings can make any investor look like a fool or a genius in a matter of moments. But by investing in a company you believe in, and provided you trust the multiple reports coming out in favor of a booming marijuana industry in the near future, a buy-and-hold strategy, in my opinion, might be the better alternative to the hectic stop-and-go of day trading.
How to Profit from Marijuana Stocks
Having laid out my reasoning for a future-oriented marijuana market investment strategy, let’s take a look at some of the best ways to profit from pot.
An important tool that investors can use to help keep them ahead of the game is knowledge. As with any other industry, it’s crucial to have as much information on hand as possible before making investment decisions. But in the marijuana industry, there’s a little more to it than balance sheets and company financial reports. One of the key factors in the marijuana market is the news.
For instance, Donald Trump and his administration could have a massive impact on just how weed legalization plays out in the U.S. potentially for the next seven years. His attorney general, Jeff Sessions, is a notorious anti-drug crusader who has long advocated for harsher restrictions. To make matters worse, he has even threatened states that legalized weed. Due to a rule known as federal preemption, the federal government technically has the right to go into states and enforce federal law—which still prohibits the usage and sale of pot—even if state law legalized recreational marijuana.
It’s a tricky situation. A company that is rolling in money one day could end up in serious trouble the next if the U.S. Fed decides to crack down on its consumer base.
So for those looking to profit from marijuana stocks, you need to keep your ear to the ground and follow not just the financials of a company, but also know which way, legally and politically, the wind is blowing.
Best Marijuana Stocks
Of course, all the best marijuana market strategies aren’t worth much unless you can accurately identify the best weed stocks.
Chart courtesy of StockCharts.com
For me, one of the best choices remains CANOPY GROWTH CORP COM NPV (OTCMKTS:TWMJF). With a $1.45-billion market cap, Canopy Growth is one of the largest marijuana retailers around and one that is poised to take advantage of a lot of the new developments in the industry.
The upcoming 2018 recreational weed legalization in Canada is obviously going to be a huge boon to recreational pot sellers. Canada will be the first developed nation in the world to totally legalize the drug, and as such will be an interesting guinea pig for other countries to observe. Canopy Growth is specifically able to take advantage of Canadian legalization by being a Canadian company itself, while also having the resources and money to ensure that it has staying power. No matter the ups and downs that come, Canopy Growth should be able to weather the storm and benefit from the boom times.
Another great option is APHRIA INC COM NPV (OTCMKTS:APHQF). Similar to Canopy, Aphria is a Canadian company and therefore likely to be a beneficiary of the approaching legalization. On top of that good news, the company is known for its novel and innovative growth techniques, like using a greenhouse to help make its crops cheaper and the yields more predictable.
A final marijuana stock that I’ve had my eye on is Cara Therapeutics Inc (NASDAQ:CARA). While not a straight marijuana stock like the previous two, Cara has a strong emphasis on medical marijuana that will serve the company well should turbulent times hit with the Trump administration. Medical marijuana is likely safer from targeting by the federal government in the U.S. compared to recreational usage, and therefore, a company like Cara has the good fortune of being guarded against most forms of potential federal drug pursuits.
At the same time, the company has witnessed a 40% growth over the past year, making it an attractive option to many looking to invest in the marijuana market.