The Game-Changing Year for Marijuana Stocks Is Here
If you fear the bull market in marijuana stocks is over, then we urge you to reevaluate that assumption. Because come 2018, we’re expecting a major growth spurt in marijuana stocks.
2016 was the best year on record for marijuana stocks. It gave us the three unicorns of the marijuana industry—Canopy Growth Corp (OTCMKTS:TWMJF), (TSE:WEED) stock, Aurora Cannabis Inc (OTCMKTS: ACBFF), (TSE: ACB) stock, and Aphria Inc (OTCMKTS:APHQF, TSE:APH) stock—which are the three marijuana companies to have attained a billion-dollar market valuation.
2017 has been no less, but it certainly wasn’t the best. Although the start was impressive, the marijuana frenzy cooled off toward the second half. It’s worth pointing out that the top marijuana stocks began to lose steam just as cryptocurrencies trended as hipper investments.
Here’s how returns from the three top marijuana stocks compare across the two years.
|Yearly Return 2016||Year-to-Date Return 2017|
|Canopy Growth (TWMJF) Stock||217%||130%|
|Aurora Cannabis (ACBFF) Stock||310%||218%|
|Aphria (APHQF) Stock||310%||199%|
It is no coincidence that the current top marijuana stocks are all Canadian. That’s because, sadly, we don’t find any noteworthy publicly-traded pure plays in the U.S. By pure plays, I mean marijuana growers and not biotechnology companies.
Although Canada has not yet legalized recreational weed, the market for medicinal marijuana is already active. To fill in for this demand, Canadian marijuana companies are not only producing medicinal products, they are also growing their own cannabis strains. This is why Canadian marijuana companies have managed to overshadow U.S.-based marijuana companies.
But that may change in 2018. That’s because slowly, but surely, America is moving toward the legalization of this drug in one form or the other.
Despite Trump’s aides-de-camp spewing negativity to support their anti-marijuana narrative, there’s little they can do to justify their hollow claims in the way of facts.
Just last month, the U.S. Drug Enforcement Administration (DEA) got pushed to its back foot, as it got questioned for its rationale behind listing marijuana as a “Schedule 1” drug.
Just to give you an idea, Schedule 1 drugs are deemed unlawful by the agency on the premise that they are addictive and harmful to their users (who end up being abusers).
The DEA lists “Cannabidiol” (CBD)—one of the components of marijuana—as a Schedule 1 narcotic along with heroin, cocaine, and the like. But the World Health Organization (WHO) may finally be questioning this classification.
A preliminary study carried out last month and approved by the WHO finds that CBD is found as having no harmful effects on its users. It does not have the potential to turn its users into abusers, just as other Schedule 1 drugs do. In fact, quite the opposite.
CBD has medical benefits for epilepsy patients and may prove beneficial in the treatment of several other maladies. (Source: “Thirty-Ninth meeting of the Expert Committee on Drug Dependence,” World Health Organization, last accessed December 18, 2017.)
This is only an early-stage study and more insights will be revealed by May of 2018.
Take note that alcohol and nicotine—two of the more addictive drugs with proven harmful effects on users—are not scheduled by the DEA as illegal.
So it’s only a matter of time before DEA moves marijuana out of this “list of the damned.”
Topping off these studies are independent surveys, which are reiterating that marijuana use is more commonplace than the authorities may want to believe.
For instance, the latest report by the University of Michigan has found that more high school students today smoke weed on daily basis than cigarettes.
On top of that, a growing number of them perceive it to be less risky than other drugs. In fact, marijuana’s perceived riskiness is at its lowest level in decades. (Source: “Overall teen drug use stable, but marijuana edging up, survey finds,” CNN, December 14, 2017.)
Positive news like this cements our beliefs that the anti-marijuana fears sensationalized by films like Reefer Madness, which haunted our older generations through the latter half of the twentieth century, are finally diminishing.
Pay attention to America’s neighbor. Right next door, Canada is about to set a precedence and America will be closely watching. Canada is going to fully legalize marijuana for recreational use by July 1, 2018.
By doing so, the country would effectively curtail, if not kill, its black market and be able to tax marijuana sales. It’s also a good chance for the Liberal government to replenish its depleting revenue coffers.
That’s an incentive that state officials, struggling with federal budget cuts here in the U.S., cannot simply pass.
Colorado is a great example for them. The state has fully legalized marijuana for recreational and medicinal use and is taxing its sales. The tax revenue is being directed toward infrastructural and socio-economic development within the state.
We feel assured that the U.S. authorities may no longer have a justification to turn a blind eye to these pro-legalization signs. So far, eight U.S. states and the District of Columbia have fully legalized marijuana. Overall, about 29 states have partially legalized it, that is, for medicinal use only.
Long story short; we’re extremely bullish on marijuana stocks just as we approach the New Year.
Top Marijuana Stocks to Watch Out for in 2018
This brings us to our top picks for 2018.
Although it’s almost certain that the three aforementioned marijuana heavyweights may continue to dominate this space, we’re truly excited about five lesser-known marijuana companies, which could surprise investors with triple-digit gains in the coming year.
|Country of Origin||Nature of Business|
|CannTrust Holdings Inc.(OTCMKTS:CNTTF, CNSX:TRST)||Canada||Marijuana grower and seller of medicinal products. Read our full coverage here.|
|CanniMed Therapeutics Inc (OTCMKTS:CMMDF, TSE: CMED)||Canada||Marijuana grower and seller of medicinal products. Read our full coverage here.|
|Hydropothecary Corp (OTCMKTS: HYYDF, CVE: THCX)||Canada||Marijuana grower and seller of medicinal products. Read our recent coverage here.|
|Kush Bottles Inc (OTCMKTS: KSHB)||U.S.||Marijuana branding, packaging, and marketing company.|
|Scotts Miracle-Gro Co (NYSE: SMG)||U.S.||Sells marijuana growing equipment through its subsidiary. Read our brief coverage here.|
Full marijuana legalization in Canada, followed by a number of U.S. states legalizing weed for medicinal or recreational use, would open the floodgates for legal marijuana money to flow into the industry in 2018. This could give us another “gold rush” of sorts, except it’ll be green.
We’re keeping close tabs on the aforementioned stocks, which we feel could be the top marijuana stocks for 2018. So, don’t let them slip under your investment radar.