I’m a huge believer in being honest.
And, to be honest with you, cannabis stocks have – despite the hype – been an utter disappointment for years.
Back in October 2018, Canada legalized recreational weed. That was supposed to open the floodgates for the cannabis industry, and usher in a new “Golden Era” for cannabis companies, sparking a decade of hypergrowth.
That didn’t happen.
Canada botched the roll-out of legal weed by being too restrictive on taxes and distribution. Demand stayed in the black market. Other countries took note, and proceeded to put their own cannabis legalization efforts on hold.
Pot stocks – which soared into the Canadian legalization catalyst in late 2018 – have since plunged, with the ETFMG Alternative Harvest ETF (MJ) falling as much as 80% from late 2018 to early 2020.
Talk about a disappointment…
But the tide is finally starting to turn for this “disappointing” industry.
In 2020, Canada significantly eased cannabis market restrictions, establishing a stronger legal framework that is pulling demand from the black market into the legal channel.
These key changes include:
- Pivoting from a “lottery system” for retail store openings to an “open licensing” model, which has removed a hard cap on the number of cannabis stores allowed to operate in certain provinces and caused a surge in legal pot distribution.
- Introducing new derivative products like edibles and drinks into the market, which has sparked a surge in consumer demand.
- Dropping the price of legal cannabis to $7.05 CAD per gram, which undercuts the cost of black market weed at around $8 CAD per gram.
For the first time ever, legal pot spending in Canada topped black market spending in the second quarter of 2020.
In other words, the legal Canadian cannabis market boom that was supposed to happen back in late 2018, is instead happening right now.
At the same time, U.S. legalization efforts are starting to gain serious momentum.
During Election 2020, five states had cannabis legalization on the ballot. All five passed it, including some traditionally conservative states like Montana and Arizona.
Meanwhile, U.S. President-Elect Joe Biden has made it known that he intends to nationally decriminalize cannabis – which, of course, is a significant stepping-stone toward eventual nationwide legalization.
If you’re keeping score, that means Canada’s legal cannabis market is on the cusp of finally coming into its own and the U.S. legal cannabis market is ready to come to life.
It doesn’t take a rocket scientist to connect those dots.
The global stage is set for the long overdue “Pot Stock Boom” to finally arrive – and for this disappointing industry to shift into a new, never-before-seen hypergrowth gear.
Because… to be clear… young consumers are rapidly pivoting from drinking alcohol to smoking weed.
According to a 2019 Monitoring the Future survey of U.S. high school students, about 29% of high school seniors drink on a monthly basis, down from 54% in 1991 – while 22% smoke weed on a monthly basis, up from 14% in 1991.
The trend is crystal clear.
Young consumers have robust and growing demand for cannabis. Give them a solid, convenient, and affordable framework to legally buy weed, and they’ll do just that… in bunches.
That solid, convenient, and affordable framework has arrived in Canada, and is close to arriving throughout the U.S.
Get prepared for the global cannabis market go from a niche, $19.7 billion market today, to a $100-plus billion industry that rivals the alcoholic beverage market by 2030.
The era of “hypergrowth cannabis” starts today – meaning there has never been a better time to buy pot stocks.
Which stocks look best?
I have three favorite stocks in this space.
Canopy Growth (CGC) for its first-mover advantage, talented management team, and multi-billion-dollar investment from Constellation Brands. Cronos (CRON) for its unique R&D-focused business model and multi-billion-dollar investment from Altria. And GrowGeneration (GRWG) for its compelling opportunity to become a one-stop Home Depot for cannabis.
All three stocks are breaking out right now.
CGC is up 29% over the past two weeks…
CRON has tacked on 32%…
And GRWG, at 75%, is just shy of doubling…
But these breakouts are just the start.
Over the next decade, multiple pot stocks have an opportunity to rise several hundred percent as they collectively define a new retail category.
And it all starts today…
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.