The best choice for those looking to get involved in this space would be to invest in top OSMs such as Curaleaf, Cresco Labs or Trulieve Cannabis. Legalization will simplify their operations and make their actions more accessible. While Canadian companies Canopy Growth and Tilray Brands would certainly benefit from legalization, I am not convinced of the quality of the deals they have completed. (MedMen and Acreage are much riskier and smaller than the big OSMs in the US.) Who are the three pot stocks to buy after Biden`s pardons? My choices are not as obvious as you might think. “There wasn`t enough supply to meet demand in the period immediately following legalization,” said Saleem Daya, principal analyst at Toronto-based Nasdaq. “There was a large backlog of orders and manufacturers didn`t initially know which products or varieties would be popular and where. This challenge quickly accelerated into an oversupply situation. Simon isn`t the only executive with this prospect either, as many industry leaders are banding together to form the U.S. Cannabis Council to advocate for accelerated legalization. Simon isn`t the only leader hinting and salivating about the upcoming opportunity. If legalization takes place, these businesses will be able to more easily access banking services, obtain credit and grow organically.
They would be able to move their products across state borders, and expansion into a new state would no longer require them to acquire a company that was already operating there. The cannabis space is once again full of enthusiasm for legalization efforts in a major North American country. In 2018, it was optimism about impending federal legalization in Canada that drove up local cannabis stocks like Canopy Growth Corporation (CGC) – Get Free Report and Tilray (TLRY) – Get Free Report, as hopes for a burgeoning industry supported assessments that, in retrospect, went far beyond reason. One catalyst that could turn things around is the legalization of marijuana in the United States. But even if more people use weed than in the past, that doesn`t mean legalization is imminent. So it comes down to a very important question: should you buy cannabis stocks today, or should you wait? The announcement also follows Biden`s shift in position on cannabis over the years — from opposing legalization to supporting some degree of decriminalization and use of medical cannabis. And it comes as Democrats try to win support for this year`s midterm elections and many Republican lawmakers wary of legalization. However, Canada`s experience with cannabis legalization may also remind investors of the dangers of over-optimism about liberalizing legal restrictions. Let`s say you`re waiting for there to be a better flow of news around the federal legalization of cannabis, which would lead to more upside down in the cannabis industry.
In this case, you would likely buy Aurora cannabis and other cannabis stocks at much higher prices than today. Mitch Baruchowitz, founder and managing partner of Merida Capital Holdings, told MarketWatch that Biden`s actions are a reminder that cannabis is still on a broader path to legalization. But he said the measures outlined Thursday echoed too much of Biden`s earlier remarks on cannabis. Some Canadian cannabis producers have preemptively entered into takeover agreements for U.S. companies, which will be set aside until pot is legalized at the federal level. But once legalization is done, these agreements can be executed immediately. These are the stocks that will have the most to gain in the short term if and when legalization takes place. The big danger with pot stocks is that many, like Aurora, are incredibly risky. In the case of Aurora, the stock may seem cheap, but it`s also because it has always disappointed investors. Moreover, the promises to achieve profitability were a work in progress that never seems to be done. “Focus on the quality of the previous business plan and execution, not unrealistic future goals,” advised Michael Ruscetta, CEO of cannabis-focused financial services company Trichome Financial.
“Focus on the `who` as well as the `what` – there will be a lot of teams looking to raise capital for unrealistic plans.” As bad as the stock market has been lately, cannabis stocks have been much worse buys. On September 26, the price of the Horizons Marijuana Life Sciences ETF fell 61% over the past 12 months, compared to the more modest 18% decline in the S&P 500. Buying down is a challenging prospect for cannabis investors, as cannabis stocks have consistently moved in only one direction: the downside. Last week, cannabis stocks jumped on news that President Joe Biden was granting pardons to thousands of people convicted of simple possession of marijuana in federal court, saying the government would begin a review of the legal classification of cannabis. Currently, it is a Schedule 1 substance like heroin, so it is legally treated as a very dangerous drug that has no acceptable medical uses. Biden also called on governors to pardon those convicted of possession of marijuana at the state level. It`s also the first bright spot in a year for cannabis stock investors, where shares of cannabis companies – from retail to real estate – have fallen further and faster than anyone else. In addition, MSOs could list their shares on major exchanges such as the NYSE and Nasdaq. This would give them more visibility with investors and their shares would be more liquid – two big advantages.
It has big revenues and they are only increasing with legalization at the federal level. If you`re comfortable taking a significant risk and agreeing to wait many years for legalization, buying cannabis stock could prove profitable today. However, I still wouldn`t suggest investing in a struggling stock like Aurora Cannabis – multi-state operators in the U.S. have much better finances than their Canadian counterparts and are more attractive purchases. Cannabis stocks posted record gains Thursday after President Joe Biden formally attempted to review how marijuana is classified under federal law, a shift cannabis producers in the U.S. and Canada have long sought after months of stalled federal reform that has marred enthusiasm in the industry. While the strong performance of cannabis stocks since their low point in 2020 has had several catalysts, including an expected breakthrough from COVID-19 lockdowns, optimism about legalization in the U.S. has certainly been a major factor. Curaleaf Holdings (CURLF) gained 33% after the October 6 news. He made the list of 10 actions.
“Marijuana-related stocks like Tilray, (Sundial) and Canopy Growth jumped in the news as the market as a whole fell,” Ian Katz, an analyst at Capital Alpha Partners, wrote in a note Thursday. “But if investors were to bet that Biden`s decision would lead to the legalization of marijuana, they would likely be disappointed.” www.barrons.com/articles/maryland-missouri-marijuana-legalization-weed-stocks-51667971324 Then there are the companies that don`t operate in the U.S. and won`t be willing to enter the domestic market quickly after legalization. Aurora Cannabis and SNDL fall into that category, and investors shouldn`t expect their shares to take off if the U.S. legalizes pot. In my last Kiplinger article on the top 10 marijuana stocks to buy now in September, I decided to include the ETFMG Alternative Harvest ETF (MJ) in my selection. “We believe our key lessons learned from our operations in Canada will help us with the EU and the U.S. market once legalization takes place,” Irwin Simon, CEO of Aphria (APHA) – Get Free Report, said on a conference call on April 12, saying legalization is more a matter of when than if.