I see two powerful catalysts directly on the horizon for cannabis stocks and an elite group of cannabis stocks are already starting to take off. For anyone who does not already own these stocks, there is still time to get in.
Cannabis stocks exploded higher on Friday – logging one of their best days in the last year.
- Curaleaf Holdings (CURLF) jumped 11%.
- Green Thumb Industries (GTBIF) jumped 10%.
- Cresco Labs (CRLBF) jumped 15%.
- Canopy Growth Corp (CGC) jumped 9%.
Why are these cannabis stocks taking flight?
Cannabis stocks are in the early stages of responding to two powerful catalysts.
#1 – Up to 7 U.S. States Vote on Legalization in November
The cannabis industry has a massive fundamental event directly on the horizon. The 2020 U.S. election is the most important day for the cannabis industry in four years. Up to 7 states could be voting to legalize cannabis.
The last time we saw an event like this was back in 2016. In the last presidential election, 9 states were voting to legalize and 8 of those 9 ended up passing. Those results sent the entire cannabis sector soaring for the next two years.
Take a look at the chart below.
Innovative Industrial Properties (NYSE: IIPR) is a U.S. company that owns cannabis greenhouses that it rents and leases to cannabis producers such as Cresco Labs (OTC: CRLBF). IIPR rose 650% from December of 2016 to the all-time high from July of 2019.
Members of Cannabis Stock Trades received an alert for this incredible opportunity on December 15, 2017. We added shares of IIPR to our model portfolio. Since that time, IIPR has risen 225% – outpacing the broader cannabis sector and the S&P 500.
I see a high probability that this same cycle will repeat itself in the 2020 election.
#2 – The Biden-Sander’s Unity Plan Is a Game-Changer for the U.S. Cannabis Industry
Even though Joe Biden is a Democrat, he has been more of an old-school democrat, not really embracing cannabis legalization the way some of his younger cohorts have. However, that is rapidly changing. Here are some more details from mjbizdaily.com.
A joint Joe Biden-Bernie Sanders task force has recommended rescheduling marijuana on a federal basis, legalizing medical marijuana nationwide and allowing states to decide about recreational cannabis.
The so-called Unity Task Force marijuana recommendations are centrist. Here are key points in the language of the document:
- “Democrats will decriminalize marijuana use and reschedule it through executive action on the federal level.
- “We will support legalization of medical marijuana (federally), and believe states should be able to make their own decisions about recreational use.
- “The Justice Department should not launch federal prosecutions of conduct that is legal at the state level.”
Let me be clear – this would be a game-changer for the U.S. cannabis industry. It’s basically the equivalent of full federal legalization and that is the holy grail for cannabis stocks.
If Biden adopts these recommendations, I believe it would send cannabis stocks soaring. Here’s why.
- Weed stocks could finally be listed on U.S. exchanges like the New York Stock Exchange and NASDAQ – millions of new investors would have access to these stocks.
- Institutional investors are banned from investing in cannabis right now – it would enable institutional investors to invest in cannabis stocks – this crowd controls trillions of dollars.
- Cannabis companies would be able to access basic baking services like opening a business bank account, accepting credit cards for payment, and securing better loans.
- Cannabis companies would qualify for tax breaks they are currently ineligible for, expanding operating margins and profits.
- States would likely be allowed to ship products across state lines – California and Oregon would finally have access to domestic markets to help them unload their oversupply.
- Global leaders such as Coca Cola would finally be able to invest in the cannabis industry without worrying about federal penalties.
- U.S. cannabis companies would likely be allowed to ship their products into international markets that legalize.
As you can see, the 2020 U.S. presidential election is an enormous event for the cannabis industry – we’ve got up to 15 states voting on legalization and Joe Biden just emerged as a big catalyst for the industry with the potential of the Unity Plan.
Cannabis Stocks Are On Sale
In the meantime, U.S. cannabis stocks are on sale in a big way.
2019 was a terrible year for cannabis stocks. The sector fell sharply because expectations were running sky high and the young cannabis companies couldn’t come close to hitting those expectations.
Now the exact opposite is in play.
Expectations for cannabis stocks have literally never been lower. After a tough 2019, many investors have said “forget cannabis stocks, I got burned and I’m never investing again.”
Those feelings are understandable. However, for anyone who has written the sector off for dead, I encourage you to keep an open mind.
While the cannabis industry has an enormous catalyst 15 weeks away, these stocks are still trading at a huge discount to the 52-week high.
- Cresco Labs is trading 66% below the all-time high.
- Canopy Growth Corp is trading 67% below the all-time high.
- Curaleaf Holdings is trading 39% below the all-time high.
- Green Thumb Industries is trading 51% below the all-time high.
Here is a chart on Cresco Labs. Shares have rebounded nicely off the recent low, but Cresco is still down 66% from the all-time high.
The Big Picture on the U.S. Election and Cannabis Stocks
The U.S. election is less than 15 weeks away and regardless of who wins, it should be an enormous catalyst for the cannabis industry.
However, not all stocks are positioned to benefit. The cannabis sector is rife with questionable companies that won’t prosper. In order to cash in, it is critical that investors know which cannabis stocks to avoid and which to embrace.
Cannabis Stock Trades will do all the hard work for you and uncover the stocks are primed for massive growth.
Sign up for a 2-week free trial and gain instant access to:
- Our model portfolios with core positions and short-term plays
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*Author Michael Vodicka owns shares of Canopy Growth Corp (CGC, WEED), Cresco Labs (CRLBF), Green Thumb Industries (GTBIF) and Curaleaf Holdings (CURLF).
About the Author & Cannabis Stock Trades
Michael Vodicka is an equity analyst with more than 20 years of experience trading and investing. His research has been featured in some of the industry’s most respected publications. He has been investing and leading investors in the cannabis sector since 2013.
Mr. Vodicka brings his expertise and guidance to the members of Cannabis Stock Trades.
Join Cannabis Stock Trades for Mr. Vodicka’s exclusive analysis, trade alerts, and model portfolio.