Cannabis stocks have a huge event directly on the horizon. In fact, it's the most important event of the last 12 months and I expect it to send a certain group of cannabis stocks soaring.
On January 1 California will become the latest - and largest US state - to legalize recreational cannabis.
This is easily the most important event in the cannabis sector in the last 12 months. And I expect it to be a huge catalyst for cannabis stocks for two reasons.
1. Billions In New Sales:
California is already the largest cannabis market in the world - by a long shot. Its legal and illegal cannabis market did around $8 billion in sales in 2016 - with 75% of that from illegal sales. Recreational is expected to quickly chip into illegal sales and grow into a $4 billion annual market within a few years, from basically $0 today. That is a potential revenue and profit windfall for cannabis companies ready to capitalize. I expect this to be a strong tailwind for US cannabis stocks in general and particularly ones operating in California's high -growth market.
If anyone thought investing in weed stock was going to be easy, this week was a reality check.
Cannabis stocks collided with two obstacles in the last week.
The first, four of the largest Canadian medical marijuana stocks were temporarily halted because of high levels of volatility.
For example, last Wednesday Canopy Growth Corp (CGC) was surging into a new all-time high above $17 – up more than 20% on the day.
While that was great news for shareholders, it set off the Toronto Stock Exchanges (TSE) circuit breaker. Shares were temporarily halted so the exchange engines wouldn’t melt down like a hunk of warm cheese.
Aphria (APH), the second-largest Canadian medical marijuana company, and Organigram (OGI), the third-largest Canadian medical marijuana company, were also halted last week after hitting new all-time highs.
The trading halts only lasted a few minutes at a time.