Marijuana Stocks to Buy
It doesn’t look like U.S. President Donald Trump will be attending galas with Cheech and Chong anytime soon. President Trump and members of his administration, like Jeff Sessions and Sean Spicer, have been generally negative on weed legalization.
Having the federal government go against you will not be a boon if you are in the pot business, but that doesn’t mean the industry is doomed. We’ll go over some of the best marijuana stocks to watch now, with a potentially adversarial presidential administration in power.
The quotes coming out of the Trump administration are pretty down on weed. Here are a couple quotes to instill nightmares in the minds of weed stock bulls and those seeking out the top marijuana stocks.
“Good people don’t smoke marijuana,” said Attorney General Sessions back in April, when he was still senator of Alabama. “There is more violence around marijuana than one would think.”
And White House Press Secretary Spicer hasn’t been too kind to the herb either. “I do believe that you’ll see greater enforcement,” said Spicer during a press briefing in late February. “There’s a big difference between the medical use … [and] recreational use, which is something the Department of Justice will be further looking into.” (Source: “Marijuana sellers face uncertainty under Trump,” The Hill, March 8, 2017.)
While not exactly fighting words, this is hardly the type of pro-pot talk that we’ve seen the country trending toward in recent years.
And the country is starting to see green. According to a Gallup, Inc. poll from October 2016, 60% of Americans now approve of legalizing marijuana. That’s the highest percentage recorded in the 47 years that public approval of the drug has increased. (Source: “Support for Legal Marijuana Use Up to 60% in U.S.,” Gallup, Inc., October 19, 2016.)
This puts those who favor weed stocks in line with the American people, while the government seems to be lagging behind.
Trump Administration a Threat to Marijuana Stocks?
The marijuana industry (and therefore, the best marijuana stocks) brought in an approximate $6.7 billion in legal sales last year, and that’s without the seven states who voted to legalize marijuana in one form or another on election day. That brings the total up to eight states that have legalized recreational marijuana use and 29 states that have voted to legalize medicinal marijuana. (Source: “What Jeff Sessions Said About Marijuana in His Attorney General Hearing,” Fortune, January 10, 2017.)
Again, the pendulum is swinging in favor of letting cannabis grow free. And yet, through the power of preemption where the U.S. federal government can supersede state laws through its own legislation, even regions where the drug is now legal can experience regression if the feds choose to enforce said laws.
Jeff Sessions, for his part, has since changed his tune some regarding marijuana, saying “it is not the Attorney General’s job to decide what laws to enforce,” in response to a question posed by Republican Senator Mike Lee.
Sean Spicer has also been reluctant to step on states’ toes. After all, Republicans are usually the party that is the most vocally supportive of states’ rights. To enforce federal law over what the people in these individual states voted for would be a dramatic departure from conservative orthodoxy. Then again, Trump has been anything but orthodox in his short tenure as president, so nothing is outside the realm of possibility.
Trump has also come out with quotes favoring state autonomy on the topic of marijuana laws. “I think it’s up to the states,” said Trump in an interview with a Denver television station back in August 2016, in response to a question about marijuana sales. “I’m a states person. I think it should be up to the states, absolutely.” (Source: “Brandon Rittiman’s Trump interview transcript,” 9NEWS, August 3, 2016.)
Former president Barack Obama was also reluctant to get involved in marijuana issues, instead leaving the issue up the states and taking on a laissez-faire attitude. (Source: “What is the future of recreational marijuana in Trump’s America?” The Los Angeles Times, March 7, 2017.)
Regardless of whether President Trump decides to take a more stringent stance on marijuana, there are still barriers imposed by federal law in place that affect the pot business.
Due to federal legislation, banks are prohibited from taking money from dispensaries selling pot, turning the cannabis industry into an all-cash business. Taking a product that used to be under the sole purview of criminals and then creating legal storefronts from which to sell said product, but forcing all transactions to be done entirely in cash kept on site…you can see how that might lead to some potentially dangerous situations.
With 17 states having had lawmakers introduce legislation aimed at legalizing recreational pot for adults and taxing its sales, these sorts of conflicts between federal and state could only deepen.
Will Trump Legalize Weed?
As you can probably guess, it’s doubtful that Trump will make any leaps forward in terms of legalizing marijuana on a federal level.
Now, that doesn’t necessarily mean that weed stocks are dead, but it does mean that the top marijuana stocks will not be finding a friend in the White House. Or at least, not a close friend.
Trump, however, is not exactly well known for predictability. A change of heart on the issue, either positive or negative, could see some drastic shifts in the pot business.
Should You Buy Marijuana Stocks?
When writing about marijuana stocks, the media has shown a profane disregard for self-restraint when it comes to using numerous and readily available weed puns, myself included. Dear reader, I promise to keep my pun usage to a minimum.
But I shall break that promise here: the weed industry is, at the moment, budding.
Take Canopy Growth Corp (TSE:WEED, CVE:CGC). One of the top marijuana stocks is on a high (dammit, I did it again), up nearly 15% since the year began and a whopping 226% over the past 12 months. In the long term, things are looking good for pot stock bulls.
But it’s not all rosy on the horizon for Canopy Growth. The Canadian company took a hit as Canadian federal Member of Parliament Bill Blair—the lawmaker leading the pot legalization process promised by the current government— tempered expectations for when the drug would legally hit markets.
While some were hoping for a legalization date as early as 2018, much of the message coming from the Canadian government is definitely muted and ambiguous.
“We will take as much time as it takes to do it right,” said Blair in a recent interview. “I’m pretty reluctant to suggest a specific time frame, frankly, because I don’t know how long this will take in each of our 10 provinces and three territories.” (Source: “Marijuana stocks drop as Trudeau’s pot czar says Canada won’t rush into legalization,” The Globe and Mail, March 7, 2017.)
While Blair confirmed that a bill is due this spring, he also said that the bill would hardly mark the final hurdle on marijuana’s path to legalization.
Some of Canada’s major marijuana producers, like Canopy Growth, Aurora Cannabis Inc (CVE:ACB), and Aphira Inc (CVE:APH) saw their stock prices drop 11.3%, 10.6%, and 5.4%, respectively, in the week following Blair’s announcement.
While this has definitely hurt the stock in the short term, the question is: where will they go from here? Aphira stock, for instance, is still up over 20% in the past three months, despite the downturn.
Other companies that are focusing on the medicinal marijuana industry have remained untouched. GW Pharmaceuticals PLC- ADR (NASDAQ:GWPH) and Cara Therapeutics Inc (NASDAQ:CARA) have both seen strong gains in 2017, with little slippage.
Cara, in particular, has experienced a wild, roller-coaster 12 months. The company dropped from nearly $17.00 per share at the beginning of 2016 down to below $5.00 a share, only to rise back to its current $17.00-plus share price.
The company is not yet profitable, which is a huge potential drawback for investors but, with a cannabis-based drug portfolio and developments in eastern markets like South Korea and Japan, Cara could make a big play in 2017. After all, the company has surged 223% since this time last year. (Source: “Top 4 Medicinal Marijuana Stocks to Watch for 2017 (ABBV, GWPH),” Investopedia, February 27, 2017.)
GW Pharmaceuticals also finds itself in a promising position to take advantage of the growing marijuana industry.
The company has been researching cannabis-based treatments since 1990 and has a promising new drug entering late-stage trials called “Epidiolex.” The drug treats epileptic seizures and could help push GWPH stock if it does gain approval from the U.S. Food and Drug Administration (FDA).
Getting in before the drug is sanctioned for use could be a good play for investors but, as always in the biomedical field, a number of factors could play into the medicine being delayed or hindered, which would then play out negatively on GW’s stock chart.
The stocks mentioned above are my picks for the best marijuana stocks in 2017.
Bottom Line: The Straight Dope
Okay, the above heading is the last pun, I promise.
If you’re looking to get in on an industry that has a promising future outlook and huge growth potential at the expense of short-term reliability, then weed stocks may be your best bet.
The top marijuana stocks are no doubt strong earners; the question is whether politics will get in the way of all that. For now, marijuana companies are weathering the storm presented by federal government actions in both the U.S. and Canada.
At the same time, nations around the world continue to push toward marijuana legalization in general, with Israel decriminalizing the drug in early March, in a crucial step on the path to potentially legalizing cannabis.
The market is certainly present for a strong marijuana industry to open up. With U.S. sales already quite high, considering the limited consumer base, as more of the globe opens up to the idea of legal pot, there’s money to be made.
The best marijuana stocks to watch now, highlighted above, operate in a number of different fields and face a variety of challenges, from medical tests to uncooperative governments. If they can overcome these challenges, however, they will become some of the hottest marijuana stocks to buy.