Shares of Canopy Growth (NYSE:CGC) are doing something not typically seen in the marijuana sector: holding consistently steady. In fact, the CGC stock price hasn’t moved much since late January, contradicting the company’s brand name. However, that might change over the long run thanks to sharply rising geopolitical tensions.
Of course, I’m talking about the escalating trade war between the U.S. and China. Whenever the top two economies of the world engage in a bitter dispute, it’s never good for business. But adding to the woe is the abrupt diplomatic tactics of the current administration. While President Donald Trump may have done well in the boardroom, his skills are not translating well on the international stage.
Worse yet, most political experts and analysts do not see an imminent resolution. Recently, Treasury Secretary Steven Mnuchin advised American companies to mitigate supply chain risk to China. Likewise, the Chinese government evoked historical struggles and called for a “long march” against the U.S.
Naturally, this conflict bodes poorly for most industries. However, I think it’s a long-term catalyst for Canopy Growth stock and other “weedpreneurs.”
CGC Stock Benefits from Hardline Stance
Before we get into why the trade war is beneficial for the CGC stock price, it’s important to note how we got here.
President Trump loves to brag about his accomplishments, even to the point of bragging about accomplishments not his own. A key example is the economy: it’s doing well, as is the stock market. Naturally, Trump took full credit.
But because the economy was doing so well, the administration felt pressure on all sides: for both optics and appeasing the conservative base, it was important for Trump not to concede cheap points to China. Emboldened by economic and market stats, he lashed out at the Chinese.
As expected, the Asian giant reacted strongly. To avoid losing credibility, and control, they’re going to do their level best to hurt us economically. And whatever their plans are, they will work.
But one exception might be Canopy Growth stock.
The Trump administration tacitly acknowledged that most sectors, including pivotal ones like technology, will suffer. Probably, the idea here is to stare down the Chinese to see who blinks first.
But we have a problem. No matter what happens, Trump and his lackeys can always go home to their plush mansions and superstar lifestyles. The American people? We’re hurting. Pain is a great motivator at the ballot box. It’s also a compelling reason for Trump to unleash the green economic machine. That, in turn, could help CGC stock and the broader marijuana market.
Cannabis’ Schedule I classification has prevented us from going fully green. But with an entire nation about to take one in the groin, this anachronistic law has got to go.
Trump is loud, but not stupid.
Canopy Growth Stock Among the Best in the Biz
I realize that this idea that Schedule I will be removed is an extravagant one. But again, I go back to the concept that pain is a great motivator. Believe me: when you’re hurting, you’ll do anything to make the pain go away.
Regardless of when our government decides to remove its head from its posterior, you’ll still want exposure to CGC stock. As our own Chris Lau reported, experts forecast the cannabidiol (CBD) market to hit $20 billion by 2024. I believe that estimate is low due to CBD’s multiple health synergies.
But whatever the case, the companies that will likely realize the most benefits are stable, proven ones. That makes Canopy Growth stock more palatable currently than its more volatile peers, like Cronos Group (NASDAQ:CRON) and Tilray (NASDAQ:TLRY).
Secondly, management has aggressively acquired cannabis firms throughout the jurisdictionally friendly world. This is where its partnership with Constellation Brands (NYSE:STZ) gives stakeholders confidence. More importantly, Canopy is staking its claim now ahead of the eventual bullish wave.
And yes, that wave is coming. Look, if South Korea can adopt a tolerant stance toward medical cannabis, surely many others will follow suit. At that point, we would have an obvious solution to our trade-war woes: declassifying marijuana will spark new industries, viable agricultural exports, and tons of new jobs.
That’s why I’m bullish on the CGC stock price longer term. Yes, it does have strong fundamentals relative to the competition, but beyond that, just read the headlines. They’re practically screaming for marijuana stocks.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
