The stock prices for these three cannabis stocks may never be this low ever again…
Right now, investors want to know what are the best cannabis stocks to buy during the coronavirus.
That’s a great question because the fact is, we may never see cannabis stocks trade at these prices ever again.
This is a reset.
The best companies will make it through this and come out strong on the other end, taking care of their shareholders along the way. But the problem is that there are still are what we like to call the “wannabe” companies out there.
These are cannabis companies that may appear to be trading at a discount but, in the long run, they aren’t going to stick around. These companies won’t be able to execute on the long-term potential the cannabis industry offers.
In turn, they won’t make you any money.
That’s why today, we wanted to help investors navigate these choppy waters and focus on the winners.
So, let’s jump right in.
Here is our list of some of the most promising cannabis stocks to buy during the coronavirus.
Cannabis Stocks to Buy During the Coronavirus, No. 3: Medicine Man
The first company on our list is Medicine Man Technologies (OTC: MDCL).
Founded in 2014 in Colorado, Medicine Man runs a consulting service serving investors, cultivators, and aspiring cannabis entrepreneurs.
It also offers branding services, and this is one savvy way to make money from a booming industry without touching the cannabis plant directly.
While some made their fortunes during the California Gold Rush by mining for gold, Levi Strauss saw that the miners needed durable pants. From just that, he was able to launch an empire that is now worth over $7 billion.
What Strauss set up is what’s called an ancillary business, and Medicine Man has done the same.
But the company is also now getting a foothold in every aspect of the cannabis industry. Not only will it make money from providing consulting services but it will also make money starting in the cannabis cultivation process and all the way through to products being purchased in a dispensary, also known as from seed-to-sale.
And there’s a good reason why Medicine Man has been so aggressive.
Being based in Colorado, Medicine Man wasn’t allowed to receive money from out-of-state investors. That was obviously a big hold-up for the company in terms of expansion.
Fortunately, that law changed on May 29, 2019.
And Medicine Man is using that flood of cash to scoop up as many cannabis companies as it possibly can. For example, in September alone, the company announced at least seven acquisitions of other Colorado-based cannabis companies.
Most of the deals were expected to close between March and June of 2020. That may be delayed a bit because of what is happening right now, but when all of those deals close, Medicine Man could have one of America’s largest vertically integrated operations.
And once the company dominates all of Colorado, it’s going to expand across the United States.
“We are laser-focused on getting these acquisitions closed and getting integration underway. Then we will begin to look outside the state, expanding our footprint in all verticals in the cannabis space,” co-founder Andy Williams said in a statement.
Medicine Man isn’t well known now, but that’s going to change this year.
For the next stock on our list, it’s currently trading for under $3.
But it won’t be for long…
Cannabis Stocks to Buy During the Coronavirus, No. 2: Village Farms
Village Farms International Inc. (Nasdaq: VFF) was founded in 1989 in Canada, and started out as a producer of greenhouse-grown tomatoes, cucumbers, and bell peppers. It owns several greenhouse facilities in British Columbia and Texas, giving the company a large and expansive client base.
It also owns and operates a power plant and sells the electricity generated from that plant to the British Columbia Hydro and Power Authority.
However, Village Farms can also be considered a cannabis stock.
And with the company’s facilities and decades of experience with growing produce, it only makes since that Village would want a piece of the billion-dollar cannabis market.
In 2017, it formed a joint venture (JV) with Emerald Health Therapeutics Inc. for large-scale, high-quality, low-cost cannabis production.
As part of the JV that was named Pure Sunfarms, Village Farms serves as the cultivator and producer with its Delta 3 greenhouse facility in British Columbia, and Emerald brings its licensing and regulatory expertise to the table to help make sure all laws are being followed.
Thus far, this has been a very successful venture.
For Q2 2019, the JV had sales of $32 million and it was the third consecutive quarter of profitability.
Now, there’s currently a $7 million spat between the two companies, which states that Emerald owes that money to the JV.
The matter was resolved in March. Village Farms now owns 57% of the joint venture instead of it being an even split.
Now, a bigger concern investors had was a report released by Citron Research that stated that Village Farms is really a $1 stock. That was enough to spook the market to send the stock price down from around $16 to $12 in just a few days.
But if you read the presentation from Citron, it mostly focuses on Emerald Health and the past relationships and business experience of Emerald’s executive team.
The fact is that this JV with Emerald is generating money and has been profitable for three consecutive quarters. The issues that Citron believes will cause Village to drop to $1 have not materialized, and retail investors should know that Citron will also have short positions on companies it releases reports on.
The general fear caused by the Citron report sent the Village Farm stock price to under $9 at the start of November 2019 for reasons mostly outside of business fundamentals, at the time, even trading at around $9 made the company an attractive investment.
Now trading at under $3, it’s an absolute bargain.
Cannabis Stocks to Buy During the Coronavirus, No. 1: Acreage Holdings
The story of Acreage Holdings (OTC: ACRGF) starts back in 2011 when Kevin Murphy invested in a Maine cannabis license.
That led Murphy to launch High Street Capital in 2014, which was rebranded as Acreage in 2017.
That brings us to today. Acreage currently has 28 dispensaries open in 11 states. In total, the company is licensed to open 88 dispensaries in 17 states.
The company’s brands currently include The Botanist, Prime, Live Resin Project, and Natural Wonder.
And because of Acreage’s impressive growth in such a short period of time, Murphy’s company attracted the attention of Canopy Growth Corp. (NYSE: CGC).
When the United States legalizes the production and sale of cannabis, the deal will close for $3.4 billion. Canopy could have gone with the idea of starting something from scratch, but it takes time and money to build a brand.
Acreage already has its brands established, distribution networks in place, and revenue coming in.
So instead of building something that would eventually grow, Canopy just bought the growth.
For Acreage, the company will not have to worry about trying to raise money and can use Canopy’s massive war chest of cash to grow and expand. The deal would also eventually allow Acreage access to international markets.
Overall, this deal will work out for everyone, but it is still going to take some time before it closes.
Until it does, Acreage is operating as an independent company, but the market is not viewing things this way.
It’s not rewarding the company for its massive growth and dominant presence throughout the United States. In fact, Acreage just opened two locations in Ohio at the end of October 2019 while other companies were cutting down on their staffs and looking for ways to save money.
Ohio is a medical-only state right now, but sales are expected to reach over $1 billion by 2025.
And with the new Acreage location in Cleveland, it’s easy to tell the company is playing the long game and expects full U.S. legalization soon.
In the map below, you can see that its location at 3865 Lakeside Avenue East is very close to the Rocket Mortgage FieldHouse, the Rock & Roll Hall of Fame, and FirstEnergy Stadium. In other words, it has a dispensary near popular tourist destinations.
It’s just an eight-minute ride from where the Cleveland Cavaliers play basketball to the dispensary.
Over the next year, we expect the market to pay more attention to what Acreage is doing instead of just lumping it in with how Canopy Growth is performing.
At these prices, Acreage is offering a tremendous opportunity.
23 responses to “3 Cannabis Stocks to Buy During the Coronavirus”
April 06 2020