It’s safe to say that 2020 hasn’t been easy for marijuana stocks. To be fair, 2020 hasn’t been easy for, well, everything and everyone, but marijuana stocks have been particularly hurt during this COVID-19-stricken year. But some of that malaise is now being at least being partly alleviated, as we’ve seen the first major gain in U.S. marijuana legalization in months now: Vermont marijuana legalization.
While Vermont is a small state with a small marijuana market (not to mention that the first pot store won’t likely be open until at least 2022), there are a couple of important takeaways from this event.
The first is that it’s another brick laid in the foundation of the U.S. marijuana market, building towards an inevitable legalization push in the coming future.
Remember that, despite political opposition, the majority of Americans support marijuana legalization. This is at least partially reflected in the Democratic Party; most of the presidential hopefuls who ran this cycle supported legalization in one form or another. (It’s unfortunate that, of all the candidates, the winning one was the only person who opposed legalization, but we could spend all day poring over the many disappointments of the current American political landscape.)
With over 100 million people living in the U.S. able to legally purchase pot in their states while it remains an illegal act on the federal level, there’s a downright silly dissonance in the law that is begging to be rectified by action on the federal level. The do-nothing Congress is living up to its name in this regard, but all the same, it’s hard to ignore the myriad arguments building day by day for U.S. marijuana legalization.
And, of course, should marijuana become legal in the U.S., then of course pot stocks would surge.
With the future of the industry already angling towards U.S. marijuana stocks, a legislative victory for marijuana in the highest government of the land would naturally spur growth on par with, if not exceeding, the gains we saw in the lead-up to Canadian marijuana legalization.
What’s more, with many pot stocks currently trading at a discount right now, it’s perfectly reasonable, likely even, to see gains that will outpace the Canadian marijuana legalization bump.
And, you’ll recall, the gains witnessed then were in the triple digits, meaning that marijuana stocks are almost certain to see another rush in excitement in the near future.
So the best days are by no means in the past when it comes to marijuana stocks. While governments the world over have their attention focused elsewhere at the moment (as they should), when this pandemic is eventually vanquished, the renewed focus on marijuana stocks will help inspire investors to return to the market in droves. And when that happens, considering the low prices pot stocks are trading it, it will definitely pay to have been an early buyer.
The next major point of note regarding the Vermont marijuana legalization is that this is the first legalization process in a state that was undertaken by the legislature. (Source: “Vermont to legalize recreational marijuana,” The Hill, October 9, 2020.)
By that I mean that the state Congress and governor were able to sign a bill into law legalizing marijuana of their own volition; in other states, the issue was usually kicked to the citizenry by way of a referendum.
This is important, as shows that the political cost of voting for marijuana legalization is lessening.
While in some demographics and states it would still likely be career suicide (or at the very least detrimental) to vote for pot legalization, but in many states the stigma surrounding weed is being dispelled.
With that stigma-curbing comes further political will to see the drug legalized. The case for pot legalization pretty much makes itself from moral and ethical points of view, but even the politics make perfect sense: create jobs in your state while simultaneously reducing crime and incarceration, all while earning a healthy income via taxes.
It’s a no-brainer…but politicians are famously adept at fumbling no-brainers.
Government-bashing aside, the point remains that marijuana stocks are the most politically supported they have ever been worldwide, and that goes double within the U.S., as it has traditionally been one of the most draconian drug law enforcers in the world.
Marijuana Stocks in 2020
While the future does certainly look bright for marijuana stocks moving forward, even though 2020 has been a tough year, it’s worth noting that pot stocks in 2020 haven’t all been duds.
In fact, several pot stocks have actually performed very well this year in spite of the rough market conditions.
U.S. marijuana stocks in particular are proving to be very impressive, which makes sense given how much untapped potential remains in the U.S. marijuana market.
The first and most impressive at the moment is Innovative Industrial Properties Inc (NYSE:IIPR).
We’ve written a lot about this gem at Profit Confidential, but for those who don’t know about this company yet, know that IIPR stock is a very strong security right now.
This marijuana real estate investment trust (REIT) pays a dividend and, as seen in the chart below, is up huge in 2020, having gained nearly 80% year-to-date.
Not far behind is another U.S. pot stocks, Curaleaf Holdings Inc (OTCMKTS:CURLF).
Curaleaf stock was projected to earn a billion dollars in revenue in 2020 before COVID-19. Even with the pandemic hampering its projections somewhat, it is still a very strong-looking company.
Curaleaf stock is up 35% in 2020.
Stock Chart: IIPR vs. CURLF
Chart courtesy of StockCharts.com
Pot stocks are finally looking to be on the other side of this horrid downturn.
The pandemic has caused a host of problems for the marijuana industry, but that doesn’t mean there hasn’t been any good news in 2020.
With the Vermont marijuana legalization, U.S. marijuana legalization is another step closer to becoming a reality and to instantly juicing all those marijuana stocks in a run we haven’t seen the likes of in years.
While we’re still more than likely a few years away from that surge, the fact remains that it is approaching, and it will very likely garner significant profits for the savvy pot investor’s portfolio when it does arrive.