In this terribly contentious election cycle, there is an issue that seems to cut across otherwise deep-seated political and ideological beliefs: cannabis. Last month, Sen. Kamala Harris, the running mate of former Vice President Joe Biden, announced in a virtual town hall, “we will decriminalize the use of marijuana…” But will that be enough to save embattled marijuana stocks?
Undoubtedly, the market has printed much red ink and the novel coronavirus certainly hasn’t helped. However, we are talking about a paradigm-shifting sector. Obviously, before various legalization measures were implemented in North America, cannabis was a black market and therefore untaxable. With legalization, though, comes the ability for governments to receive a new revenue channel. That is not an insignificant consideration for marijuana stocks given the present economic malaise.
Further, cannabis represents a distinct platform of bipartisanship — and it’s not just at the individual level. Most notably in the United States, lawmakers came together for the passage of the Agriculture Improvement Act of 2018, colloquially known as the Farm Bill. This piece of legislation opened the door for cannabidiol (CBD), or cannabis products that feature no more than the legal threshold of tetrahydrocannabinol (THC). Essentially, CBD is cannabis without the high.
Finally, we should consider one more angle. During this national emergency, many Americans unsurprisingly are stressed. To be clear, the therapeutic benefits of cannabis have not been officially established. However, we all know that people use the green stuff to detox from day-to-day stressors.
Fundamentally, the coronavirus has accelerated this demand, drawing speculative attention toward these currently deflated marijuana stocks.
Here are seven to buy now for a post-election bump:
- Canopy Growth (NYSE:CGC)
- Cronos Group (NASDAQ:CRON)
- Tilray (NASDAQ:TLRY)
- Innovative Industrial Properties (NYSE:IIPR)
- Charlotte’s Web (OTCMTKS:CWBHF)
- Turning Point Brands (NYSE:TPB)
- Curaleaf (OTCMKTS:CURLF)
Marijuana Stocks: Canopy Growth (CGC)
Before everyone’s attention shifted to the novel coronavirus, one of the reasons to be hopeful in otherwise beaten-up Canopy Growth was its First & Free CBD brand. As you might imagine, some older folks have moral issues with cannabis. However, with CBD, the psychoactive compound is removed, leaving behind the cannabis plant’s purported therapeutic benefits.
Among them is some evidence that demonstrates CBD’s efficacy toward pain management. Obviously, this has significant implications for older people, who may suffer from conditions such as osteoarthritis. Potentially, we could see a rise in CBD sales, which would benefit CGC stock.
As well, the Washington Post noted that the Covid-19 pandemic is ruining our sleep. That’s not unexpected, given how the sudden shift to remote work has done a number on our daily routine. Here again, CBD combined with other plant-based solutions may help some users.
Although no cannabis player should be considered a reliable investment, CGC stock is arguably the most dependable relative to other marijuana stocks. So, if you’re going to speculate, you might as well start here.
Cronos Group (CRON)
Before marijuana stocks entered into their shocking tailspin, Cronos Group seemed to be the smart choice. In December 2018, tobacco giant Altria Group (NYSE:MO) agreed to buy a 45% stake in CRON stock for about $1.8 billion. Initially, the deal paid off handsomely as Cronos shares quickly skyrocketed off the news.
Unfortunately, CRON stock peaked in early 2019. Since then, it has been mostly a downward slide, accentuated only by a few head-fakes. One of the problems facing marijuana stocks was that there was too much hype built into the sector. In addition, participants focused on expansionary goals rather than profitability. Because many of these players were headquartered in Canada due to favorable legislation, the home market was too small.
Further, its foray into the U.S. CBD market through key acquisitions hasn’t panned out. However, the stress of Covid-19 and natural solutions to address it could rejuvenate Cronos. There are no guarantees here. However, with shares so deflated, this may be worth a look for speculators.
Marijuana Stocks: Tilray (TLRY)
I noted in early September that medicinal marijuana specialist Tilray could benefit from a Covid-19 tailwind. Clearly, statewide and national lockdowns are not great for mental health. Even if you’re a homebody, it’s good to go out and get some sun. Humans were not designed to be cooped up at home forever.
But for those that needed a little extra help, Tilray’s cannabis-based offerings could theoretically provide some therapeutic assistance. Again, people love smoking weed to take the edge off. And that was before the word “coronavirus” was exclusively the lexicon of epidemiologists. In the new normal, cannabis-based therapies should fly off the shelves, thus lifting TLRY stock in the process.
Except that the opposite happened, as I warned readers. The problem was that while the Covid-19 narrative was compelling, it may not be enough to offset the black-market problem. Basically, it’s cheaper to get illegal weed. And who during this fractured time in North America was going to enforce marijuana laws?
Recently, however, TLRY stock has been on a charge. It is possible that favorable legislation in the U.S. could foster greater partnership between us and the Canadians. Granted, this is speculation, but if you’ve got the stomach for risk, Tilray may be one of the marijuana stocks to experience a post-election bump.
Innovative Industrial Properties (IIPR)
If a direct play into marijuana stocks isn’t as important as consistency and reliability, look no further than Innovative Industrial Properties. Structured as a real estate investment trust (REIT), Innovative Industrial acquires real estate assets for medicinal marijuana production. Thanks to this focus, it avoids much of the criticism surrounding the green sector.
Because it’s a REIT, you’re not going to be able to go to its Rancho Bernardo headquarters — a sleepy neighborhood of San Diego — and light up. It is not that kind of business.
However, because of this reality, IIPR stock has some insulation from the volatility impacting other marijuana stocks. Actually, it has gone completely against the grain. On a year-to-date basis, IIPR stock is up nearly 64%.
Now, that might pose some concern for those not wanting to hold the bag. However, if Joe Biden becomes our next president, individual liberties could see a heyday. In that scenario, it would be an overall net positive for IIPR stock.
Marijuana Stocks: Charlotte’s Web (CWBHF)
Interestingly, when I visited the website for Charlotte’s Web, the company advertised its Sleep Gummies front and center. The company might be rotating its frontpage banners with different products — frankly, I don’t know.
But if it’s intentional, it’s one of the smartest moves ever to reboot interest toward CWBHF stock. That’s because Americans have found themselves being discombobulated because of the coronavirus. Here’s what the Washington Post had to say:
As if the novel coronavirus has not already wrought devastation aplenty on the world, physicians and researchers are seeing signs it is doing deep damage to people’s sleep. “Coronasomnia,” as some experts now call it, could prove to have profound public-health ramifications — creating a massive new population of chronic insomniacs grappling with declines in productivity, shorter fuses and increased risks of hypertension, depression and other health problems.
It’s easy to see why people can’t sleep, experts say. The pandemic has heightened stress and upset routines.
Clearly, Americans are hurting. In this context, then, it’s possible that people will seek natural means to remedy their sudden insomnia. I’m not suggesting that CBD is the definitive answer, but rather, people might assume it is. And that could end up helping CWBHF stock.
Turning Point Brands (TPB)
Perhaps best known for its Zig-Zag cigarette papers and other tobacco-related products, Turning Point Brands has been making a sharp push toward cannabis-based products. Just recently, the company announced that it acquired a 20% stake in Wild Hempettes, which is a leading manufacturer of hemp cigarettes under the brands WildHemp and Hempettes.
Further, Turning Point has the option of increasing “its stake to a 100% ownership position based on certain milestones.” Though arguably not as celebrated as other marijuana stocks, Turning Point offers product diversity that you shouldn’t ignore.
For one thing, TPB stock has performed reasonably well this year. Okay, so it’s 11% year-to-date return isn’t really special. Nevertheless, when you stack it up against the hideous losses that many marijuana stocks have incurred, Turning Point gets a big plus.
Moreover, a Biden administration could be net positive for TPB stock. True, CBD and hemp are already legal in the U.S. However, if Biden and Harris make good on their pledge to decriminalize marijuana, that could go a long way toward ridding cannabis stigmatization.
Marijuana Stocks: Curaleaf (CURLF)
Although marijuana stocks are usually characterized by red ink and much disappointment, that doesn’t apply to Curaleaf. Based in Wakefield, Massachusetts, Curaleaf is what business nerds call a vertically integrated organization. Simply, this just means that one organization handles the disparate duties normally handled by two or more companies.
It also gives business nerds a chance to use the term “verticals.” Personally, I’m not a big fan but whatever. The point here is that CURLF has gone vertical, up over 53% YTD. Additionally, shares are up nearly 36% in the month so far.
If you’re a gambler, you may want to include Curaleaf in your portfolio of marijuana stocks. Why? Curaleaf does business in Arizona. Now, Arizona is what the vertical integrator describes as a limited-license state. This is significant because its residents are generally conservative.
However, Arizona might flip for Joe Biden. According to Reuters, the latest polls indicate that Biden and President Donald Trump are neck and neck. If Arizona does turn blue, it could mean that Arizona is ready to give the green light to marijuana. In that case, CURLF stock can fly.
On the date of publication, Josh Enomoto held a long position in MO stock.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.