Donald Trump took the White House, Republicans control of both houses of Congress and Jeff Sessions is officially attorney general. That combo is bad news for U.S. marijuana stocks.
On Election Night, marijuana scored key vote victories in eight out of nine states. Unfortunately, it remains illegal on a federal level, and prospects for U.S. federal legalization of marijuana seem nearly nonexistent in the near future.
Business is booming for marijuana stocks in states with legalized weed. But a big part of the huge growth in the marijuana business in recent years has been the previous administrations’ willingness to turn a blind eye.
Trump’s temporary travel ban and free trade disruptions make clear that he is certainly not scared to disrupt the status quo. In the past, Sessions has harshly criticized the marijuana industry. Sessions even once said “good people don’t smoke marijuana.”
Trump’s unpredictable and aggressive policy attitude could easily disrupt the U.S. marijuana industry overnight. Fortunately, not every marijuana stock needs federal legalization. Here are three marijuana stocks that would be just fine if the U.S. never legalizes weed.
Marijuana Stocks to Buy: GW Pharmaceuticals (GWPH)
If you didn’t know where cannabidiol came from, you would never group GW Pharmaceuticals Plc-ADR (NASDAQ:GWPH) in with other marijuana stocks. GWPH is a biopharmaceutical company developing cannabis-based drug Epidiolex for treatment of a rare brain dysfunction called Dravet syndrome.
GWPH is a British company. It’s not skirting U.S. federal laws to get a piece of the marijuana market. Instead, it is simply developing Epidiolex and several other cannabis-based drugs the same way any other biopharma company would. It’s running down the same U.S. drug development checklist of testing and reporting data. Its results have little to do with marijuana law.
So far, positive data on Epidiolex suggests there is plenty of reason for hope. The FDA could potentially grant GWPH access to the U.S. market within the next year or two, with a potential for $1.1 billion annually by 2021. To do so, Congress won’t have to amend the Controlled Substance Act. It won’t have to face any push-back from anti-marijuana constituents. Instead, the FDA will simply have to grant parents access to a potentially better and cheaper treatment for their afflicted children’s seizures.
After an action-packed 2016, there may not be any major catalysts to propel the stock higher until the second half of 2017. In the meantime, while other marijuana investors will fret about the Trump administration, the only thing GWPH stock investors have to fear is the efficacy data from its studies.
Marijuana Stocks to Buy: Canopy Growth Corp (TWMJF)
The U.S. marijuana legalization movement has been temporarily derailed. However, it seems to be full speed ahead for our neighbors to the north. Canopy Growth Corp COM NPV (OTCMKTS:TWMJF) is the single-largest marijuana company in the world. The company’s OTC-listed stock has a market cap of roughly $1.6 billion. At that size, TWMJF is now even larger than S&P 500 member Fossil Group Inc (NASDAQ:FOSL).
TWMJF has taken a commanding lead in the Canadian marijuana market. In Canada, medical marijuana is already legal nationwide. All Canadians are now authorized to possess up to 150 grams of dried marijuana if it is prescribed by a doctor and purchased from a licensed producer.
“Canopy Growth has assembled the broadest platform of production facilities and brands in Canada, establishing an early leadership in its federal legal medical cannabis program,” New Cannabis Partner founder Alan Brochstein explains.
American marijuana stocks are relegated to the OTC market. In Canada, TWMJF just debuted on the Toronto Stock Exchange, one of the largest markets in the world.
TWMJF would likely expand to the U.S. market should the federal ban ever get lifted. For now, the company is doing just fine in Canada.
Marijuana Stocks to Buy: Aphria (APHQF)
TWMJF is only one of a number of marijuana stocks taking advantage of the booming Canadian market. Aphria Inc COM NPV (OTCMKTS:APHQF) is another major Canadian marijuana grower and retailer that recently gained conditional approval to list on the Toronto Stock Exchange.
APHQF focuses on a low-cost approach to its production. The company originally planned to sell both directly to patients and to serve as a wholesaler for other providers. However, the patient business took off so rapidly that the company has since chosen to focus primarily on that side of the business.
Of course, APHQF could change the plan as the Canadian government grants more licenses to sellers. Popular Canadian drug store chain Shoppers Drug Mart applied for a license to distribute medical marijuana back in October. With more than 1,300 nationwide locations, Shoppers could be a huge new customer for APHQF if the grower chooses to go the wholesale route.
Canada could also open up the recreational marijuana floodgates at some point. Prime Minister Justin Trudeau is pro-legalization. In addition, a government task force recently recommended that Canadians should be able to possess up to 30 grams of marijuana for recreational use. The report sent shares of Canadian marijuana stocks like APHQF and TWMJF soaring.
It also gave investors hope that Canadian recreational marijuana could possibly be a massive wildcard catalyst in the years ahead.
As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.