Cannabis Stocks - 2020 and Beyond

The battered cannabis industry has left its investors wounded and bleeding, but they might not be defeated. The 420 bears killed the hype of the green goddess. But are the bong buddies out of the Jamaican shower yet, and is this industry coming back to life again? Well, it's time for the Europeans to join the bush doctor party!


Marijuana stocks have been all boom and bust post-legalization. But why buy overbought FAANG stocks that have limited upside when you can go for a beaten and immature cannabis industry?


It's not just the EU countries that are joining the party. The US is also well seated on the green train. So far fourteen US states and territories have legalized recreational cannabis sales for adults and a total of 33 states have legalized cannabis for medical purposes, and more states are on their way. Whether national legalization is on the horizon remains to be seen.


Other possibilities for states to legalize recreational cannabis could be Arizona, Delaware, Florida, Minnesota, Montana, New Mexico, North Dakota and South Dakota. Even Alabama, Mississippi and South Dakota could become new medical cannabis markets and other states' medical programs could see expansions.


The German medical cannabis market is expected to grow to nearly $11 billion by 2028, according to a recent report from Prohibition Partners. The European research firm said the market was worth $106 million in 2018. And it's not just the Germans who enters this market. Denmark, Finland, UK, Spain, Italy, Netherlands and Poland (just to mention a few) is now giving patients medical marijuana.


In advance of the March session of the United Nations Commission on Narcotic Drugs (CND), the European Union’s executive branch has proposed that EU member nations vote in favor of three of the six World Health Organization (WHO) cannabis scheduling recommendations.


Currently, cannabis and cannabis resin are included in both Schedule I and Schedule IV of the 1961 treaty. This combination is reserved for substances that deserve the highest level of control, with extremely limited or no medical value.


Pot stocks


Aphria

Shares of Canadian pot producer Aphria climbed nearly 10% after the company announced a significant step towards improving sales in Europe’s largest cannabis market. 


The company said its Aphria One facility in Leamington, Ont. has received European Union Good Manufacturing Practices (EU GMP) certification, allowing it to supply bulk dried flower throughout the European Union, including the highly sought-after German medical market.


The company’s medical cannabis business is spread across Africa, Europe, South America, and Oceania. Aphria is well-positioned to take advantage of growth opportunities beyond its domestic borders. Whereas most large growers have been losing money at an extraordinary pace, Aphria reported $16.4 million Canadian in net income in its fiscal first quarter.


Organigram

OrganiGram announced net revenue in Q1 of 25.2 million in Canadian dollars, a 55% increase from the prior quarter.


OrganiGram's solid Q1 performance shows that the company ranks among the strongest plays in the industry. With the prospects of more retail stores in Ontario and Quebec opening and the launch of new products in the Cannabis 2.0


Organigram appears to want to differentiate itself from other Canadian producers by focusing on products like vapes, pens, edibles and dissolvable powder. Organigram stock has massive upside potential now the company needs to execute.


Canopy Growth

Canopy Growth announced that it is delaying the launch of its cannabis beverages. In November 2019 Health Canada granted Canopy its license to begin production of beverages at its new facility. However, the company said that it needs to delay the launch to make sure products are up to their standards.


Canopy’s press release tried to reassure investors that this wouldn’t be a huge problem. The company claimed that this product delay will not have a “material impact” on the company’s fiscal year 2020 revenues


Although the news about delaying beverages wasn't very popular among its share holders, especially since they have teamed up with Constellation Brands, the stock price has been pretty stable, it has actually gained 20% the first month of this year.


According to industry analysts covering WEED, the consensus of breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of CA$904m in 2023. So, WEED is predicted to breakeven approximately 3 years from now.



Happy Trading!


Disclaimer: This is not a buy or sell recommendation. The author owns shares in all companies mentioned in this article and has no intention on selling in the near future.

158 views