Marijuana Stock Predictions for 2018
It seems that things are finally turning around for the legal marijuana industry. After what has been an absolutely brutal year so far for pot stocks, this past week has seen strong political news bolster the industry and send stock prices soaring.
My marijuana stock predictions for 2018 have always been positive (if tempered by the correction that hit in January), but, with a recent run of good news in the United States, my weed forecast for 2018 has gotten that much better.
So let’s start with the good news.
The recent development that has pushed marijuana stocks sky-high (and this is major) is President Donald Trump’s endorsement of states’ rights when it comes to marijuana legislation.
“Since the campaign, President Trump has consistently supported states’ rights to decide for themselves how best to approach marijuana,” said Senator Cory Gardner (R-CO). (Source: “Gardner Protects Colorado’s Legal Marijuana Industry,” Cory Gardner United States Senator for Colorado, April 13, 2018.)
He added, “…I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry. Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”
This is huge.
It really cannot be overstated how important this is in terms of pot stock predictions for 2018.
The industry has had a guillotine hanging over its head ever since Trump assumed office and appointed known anti-drug crusader Jeff Sessions as attorney general.
For months, many have wondered if Sessions would use his power as head of the U.S. Department of Justice to enforce federal marijuana laws in states where weed has been legalized.
The fear was so widespread that even Canada’s marijuana stocks were forced to adjust how they do business, with the Toronto Stock Exchange (TSE) threatening to delist companies that did not divest from certain U.S. marijuana ventures, for fear of federal retaliation.
Trump had been, up to this point, fairly fluid in his stance on marijuana, at times coming out in favor of states’ rights and at other times supporting his attorney general.
But with rumors that Trump wants to fire Sessions, alongside news that the two aren’t exactly enjoying a happy relationship these days, you have what is one of the single best possible outcomes for the marijuana industry.
The other bit of great news for the marijuana industry was the change in heart by former Speaker of the House John Boehner on the issue of marijuana’s legal status. (Source: “GOP Lawmakers Hope To Help Cannabis Company With Their Advocacy,” Forbes, April 14, 2018.)
Chart courtesy of StockCharts.com
While he was serving as speaker, Boehner was very much in the traditional Republican mold of being anti-pot, using that tired old claim that it was a “gateway drug.”
His retirement from government has led to a different perspective, it seems. Boehner now not only endorses legalization, but he recently signed on to the advisory board of Acreage Holdings, a marijuana investment company with a portfolio that includes cultivation, processing, and dispensing of cannabis across 11 states—with eyes toward expansion.
The shift of both the president and a well-respected establishment GOP member means that we’re likely experiencing a pivotal moment on how we deal with marijuana in the United States.
This is one of the most significant developments for marijuana in the U.S. in years and is truly a fantastic boon for marijuana stocks.
So, if you’re asking yourself, “Is now the right time for marijuana?” I would say the answer is an unequivocal yes.
Canada Marijuana Stocks
It’s important to remember that almost all marijuana stocks are Canadian marijuana stocks.
In fact, the only pure-play marijuana stocks belong to the Great White North. That is, of course, due to the fact that Canada is going to federally legalize all marijuana use this summer, while the U.S. federal government is only now removing the threat to prosecute companies operating legally within their states.
Other developed countries around the world still have quite stringent marijuana laws, especially against recreational use, making Canadian marijuana stocks the leaders in the industry.
But a recent development we have seen is marijuana stocks becoming listed on major U.S. stock exchanges. Whereas before, investors were forced to either buy over-the-counter stocks or invest on Canadian exchanges, companies have either moved onto U.S. listings or signaled their intention to do so.
Companies that are looking to list on American exchanges are the ones I would pay extra attention to, since they are likely to see an increase in stock value should they complete the changeover.
Safest Marijuana Stocks to Consider for 2018
Due to the marijuana sector having a rough start this year, I have long advocated for safer picks while the industry recovers. These stocks have seen boons in recent days, due to the injection of favorable news, but they were already solid marijuana stocks that I foresee having strong performances for a long time yet.
The first and safest pick in the industry is Canopy Growth Corp (OTCMKTS:TWMJF, TSE:WEED). The biggest player by market cap, the company is less susceptible to massive swings than other marijuana stocks.
Canopy was less affected than most similarly-sized outfits during the recent correction, and it even had a good string of gains during the downturn.
Of course, it was hard to make any substantial ground in early 2018, due to the correction, but the recent news has propelled Canopy Growth stock upward by nearly 15% over the past few days.
More importantly, the company is, in my view, making all the right moves.
Canopy Growth has expanded its international focus, investing in countries like Germany, which will be a massive legal marijuana market when the country eventually opens up to the drug.
The company has also signaled its intention to list on an American exchange like the Nasdaq or the New York Stock Exchange (NYSE). The very mention of its desire to list on these exchanges prompted a stock bump earlier in the year. Should the company follow through on the switch, expect a healthy gain in Canopy Growth stock.
A second company I’d like to focus on is in a similar position as Canopy Growth: Cronos Group Inc (NASDAQ:CRON). As you can see from its stock ticker, Cronos Group has a Nasdaq listing. In fact, it is the first and only pure-play marijuana company on a major U.S. stock exchange.
Listing on the Nasdaq was a huge boon to Cronos stock when the move was first announced. Later, the company received some negative attention as investors began to wonder if the stock was overvalued, due to its presence on the Nasdaq and the resultant surge in its price.
A pullback followed, but the company is once again soaring on the back of the positive news in the United States. CRON stock has been up around 37% over the past few days—one of the single best performers on the market right now.
It’s worth noting that Cronos Group has a similar focus as Canopy Growth, in that it is looking toward international markets in order to expand its business, with moves in Australia and Germany, among other countries.
It is safe to say that my marijuana stock predictions for 2018 have never been this optimistic.
Trump’s political views on marijuana have been a big concern for the industry. His views have been an obstacle in the way of investors who have considered putting money into an industry that may be on hold in the U.S. for four to eight years.
But with Trump’s recent change of heart, expect to see institutional investors loosen up their wallets and begin putting more money into the marijuana industry; something that retail investors have been doing for years now.