Several cannabis stock prices rallied after this recent announcement from cannabis, but they aren’t the right stocks to buy…
With 17 states now selling recreational marijuana, Amazon realized that it’s time to adapt its policies.
The company will no longer include marijuana in its pre-employment drug tests, and it will be now be treated the same as alcohol. That’s a sign of how the normalization and acceptance of cannabis is spreading.
For cannabis investors, there was something else Amazon said that they liked even more.
The company is endorsing the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act), and the company said it hopes other employers will join Amazon in its endorsement.
The MORE Act would expunge nonviolent federal cannabis-related arrests and convictions for those who are not currently serving a sentence. Those currently serving a sentence would be eligible to have it reviewed.
It would also deschedule cannabis at the federal level, which means that states that have legalized cannabis would no longer have to worry about the possibility of federal interference.
The passing of the MORE Act or something similar would bring more certainty to the cannabis investing market, which would trigger a series of positive events.
It would create a level of comfortability.
The Nasdaq and New York Stock Exchange (NYSE) do not list U.S. cannabis cannabis that directly sell cannabis on their exchanges, so U.S. cannabis stocks are forced to list on over-the-counter markets (OTCMKTs).
That’s why you can’t find certain cannabis stocks on Robinhood. But once something like the MORE Act passes, U.S. companies could be listed on the major U.S. exchanges, Robinhood’s 13 million users will have full access to all of the companies, and the pension funds that have billions of dollars at their disposals will start scooping up cannabis stocks left and right.
However, from what happened yesterday, it’s clear that most people don’t understand cannabis stocks.
They were buying the wrong ones after this news broke.
These Are the Wrong Stocks to Own After the Amazon Cannabis News
Amazon is supporting federal legalization, but Canadian cannabis companies were the ones that saw their stock prices climb.
These were the one-day gains of three of the most well-known Canadian cannabis companies:
|Company||Date||Opening Price||Closing Price||Percentage Gain|
|Aurora Cannabis Inc.||6/2/2021||$9.35||$10.10||8.02%|
There are pockets of opportunity to make money with Canadian companies, but the fact of the matter is that you will make the most money investing in American companies that sell cannabis across multiple states.
Hexo, Aurora, and Tilray were able to list on U.S. exchanges because recreational cannabis is legal in Canada. But what those companies have given up is being able to sell cannabis in the United States. Because again, the NYSE and Nasdaq don’t want to take the risk of listing a company that operates against federal law.
That makes the moneymaking opportunity you have with Canadian stocks much smaller than it is with U.S. companies.
For example, in Canada in 2020, there were C$2.6 billion in legal sales.
Just in California last year, there were $4.4 billion in sales.
That’s why we always tell our members that the biggest opportunities to make money are in U.S. companies that sell cannabis across multiple states.
Those are the companies you should be buying.
Unfortunately, it doesn’t look like that is what most investors are doing after the Amazon news broke.
That’s why I want to show you the two cannabis companies that should be in every portfolio right now.
Let me share them with you…
The first company that should be in every portfolio is Curaleaf Holdings Inc. (OTC: CURLF).
Over the next decade in the United States, walking into a dispensary to buy a pack of pre-rolled joints will be just as commonplace as it is right now to go into a liquor store and buy a six-pack of beer.
Curaleaf Chairman Boris Jordan knows that, and he has been planning to make sure his company is in the best position to make the most money as the U.S. is expected to become a $41.5 billion market by 2025.
Curaleaf wants to reach the 93% to 95% of U.S. households that don’t currently consume it. To do that, it will eventually become just a processor and manufacturer of cannabis products.
That will cut out the cost of grow operations, and it will also allow the company to focus more on its branding to stand out from the crowd.
“We’re making the products much more mainstream for our customer base – we’ll be no different than Coca-Cola or Frito-Lay,” Johnson said in an interview with Forbes.
The company already has operations in 23 states with a total of 123 dispensaries, making it the largest multistate operator (MSO) by dispensaries and operational states. That’s a good start in reaching the 93% to 95% of U.S. households that aren’t currently consuming cannabis.
And as more states start to legalize, it’s going to expand across the country even more – organically and through strategic acquisitions.
So just like Starbucks or McDonald’s, Curaleaf will be everywhere its potential customers will be.
The company executives expect to report $1.2 billion in revenue for 2021, which puts it right in the running to be the largest cannabis company by sales in the country.
The second cannabis stock to buy is Ayr Wellness Inc. (OTC: AYRWF).
Ayr is quietly working itself into the conversation of being one of the top multistate operators in the United States.
It plans to have more than 60 dispensaries open by the end of the year and currently has an addressable population of over 73 million people in seven states.
With 42 dispensaries planned to open by the end of 2021 in Florida, as of right now, that means it will have the second-most dispensaries in the state. And Florida is an important state.
The state only allows the sale of medical cannabis, but by 2025, research firm New Frontier Data projects it will account for 8% of all U.S. cannabis sales.
Only California is projected to sell more legal cannabis than Florida.
As you can see from the slide below of Ayr’s recent investor presentation, in addition to Florida, it is also rapidly expanding across the rest of the United States.
Investors are pouring into the wrong stocks right now, but because you have the National Institute for Cannabis Investors in your corner, you now know where to make the biggest returns.
All the best,
Partner, RADD Capital
June 03 2021