To Profit from the Marijuana Sector, Watch U.S. Marijuana Stocks

CURLF StockU.S. Marijuana Stocks

Marijuana stocks have been getting battered in 2020. Or at least, every pot stock that isn’t American has been getting battered. U.S. marijuana stocks have, in fact, actually seen pretty impressive gains over the past year, all things considered.

With that in mind, it’s easy to see that a massive potential for growth remains, if you focus on the right part of the market.

Chart courtesy of StockCharts.com

Advertisement

Take a look at the chart above. It seems to be all the over place, right?

But here’s what you should be paying attention to: the two stocks that have seen 70%-plus growth over the past 12 months are both U.S. marijuana stocks.

Innovative Industrial Properties Inc (NYSE:IIPR) and Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF) are both up big-time. And it makes a lot of sense why: all the momentum is in the U.S. right now.

U.S. pot stocks are dominant in the market. Of course, the U.S. represents the Holy Grail of the marijuana industry as many Americans hungrily await the eventual federal legalization of the drug.

I say “eventual” because the vast majority of U.S. citizens support marijuana legalization in some form or another. What’s more, every major candidate for the 2020 Democratic Party presidential nomination did so on a pro-legalization platform—with the exception of Joe Biden.

Biden, however, is rumored to be only looking to serve a single term as president. If that’s the case, the Democratic presidential candidate in 2024 is likely to have a pro-legalization platform.

That doesn’t mean they’ll win (or, if they do win, have the congressional votes to pass the relevant legislation), but there are many powers at the fingertips of the president that can create a far more friendly environment for the U.S. marijuana industry.

It should be noted that IIPR stock is a little different than other pot stocks. Innovative Industrial Properties is a marijuana real estate investment trust (REIT), which means it deals in real estate for marijuana producers.

Still, it’s one of the most effective cannabis stocks on the market. And it provides a healthy dividend to investors (all REITs are mandated to distribute 90% of profits as dividends to investors).

CURLF stock is also unique, in that Curaleaf has promised to, in 2020, become the first marijuana company to reach $1.0 billion in revenue. That milestone may be delayed due to COVID-19, but the company is among the highest moneymaking pot companies on Earth. As such, it’s worthy of your attention.

The other two stocks in the above chart are Canadian: Canopy Growth Corp (NYSE:CGC) and Aurora Cannabis Inc (NYSE:ACB).

Now, don’t get me wrong, both of those stocks have the potential to see large gains in the future, but they simply can’t measure up to Curaleaf stock and Innovative Industrial Properties stock at the moment, due to the relative stagnation of Canada’s legal marijuana market (though that could be changing).

That said, to see the largest returns and avoid higher degrees of volatility, right now all your attention should be on U.S. marijuana stocks.

CURLF Stock & IIPR Stock

The thing about Curaleaf stock and Innovative Industrial Properties stock is that both are benefiting from the growth in the American marijuana market right now.

Think about it: if they’re making big gains now, when only a handful of states have legalized recreational pot, just think of how much they could grow when marijuana legalization goes federal.

Consider that we recently witnessed the legalization of marijuana in Vermont. It was the first instance of pot legalization at the state level that was undertaken by an act of the legislature. (Source: “Vermont to Legalize Recreational Marijuana,” The Hill, October 9, 2020.)

By that I mean Vermont’s state congress signed a marijuana legalization bill into law without first holding a public referendum.

That means politicians are getting braver when it comes to passing marijuana legislation. They’re not as as afraid of the potential political backlash (what little there would be nowadays).

And while Curaleaf and Innovative Industrial Properties await legalization to spread across the U.S., neither of the two U.S. marijuana companies are resting on their laurels.

Curaleaf Inc recently expanded into Massachusetts. (Source: “Curaleaf Receives Unanimous Approval for the Acquisition of Alternative Therapies Group from the Massachusetts Cannabis Control Commission,” Cision, October 8, 2020.)

Innovative Industrial Properties Inc, meanwhile, has also been expanding across the U.S.

All in all, both companies have been making strong moves today that will position them to be even more successful tomorrow.

Remember that the U.S. market is by no means small. California alone is the largest legal marijuana market on the planet.

While cannabis is technically illegal at the federal level, Donald Trump’s administration has largely taken a laissez-faire attitude. In other words, its involvement in the market has been minimal to non-existent.

What’s more, some of the major obstacles in the way of the legal marijuana market are clearing.

Aside from political gains, the production of legal pot is becoming more cost-effective.

In Canada, recreational marijuana sold for an average price of CAD$10.25 per gram when it first became legal, while the average price on the black market was $4.00 lower.

The Ontario Cannabis Store released a recent pricing comparison showing that, near the beginning of this year, the average price for legal dried marijuana flower on its site was CAD$7.05 per gram, including taxes. That’s almost a dollar cheaper than at illegal mail-order sites. (Source: “COVID-19 Pandemic a ‘Boon’ for Legal Cannabis in Canada as Marijuana Industry Turns Two,” Global News, October 17, 2020.)

That drop in price is also coming to the U.S., which in turn will help cut out the pot black market that has continued to thrive due to its traditionally far lower prices.

Add in the fact that the pandemic has made people a little less willing to put their health fate in the hands of unregulated drug dealers, and you have what could end up being a boon for pot stocks in the long term.

All this culminates in a very exciting market going forward, so keen pot investors ought to keep a lookout for CURLF stock and IIPR stock to continue rising.

Analyst Take

The future of pot stocks is looking bright, but nowhere is that future brighter than in the U.S.

American marijuana stocks have been surging, and for good reason. They have the potential to be among the fastest-rising stocks for years to come, maybe even the next decade if marijuana is federally legalized in the U.S. by 2025 (a very possible outcome).

Overall, Curaleaf stock and Innovative Industrial Properties stock represent the top of the industry right now.