There isn’t anywhere in the world that has yet to experience the effects of the recent COVID-19 pandemic, and the stock market is no exception. Stocks of every variety have taken a major hit and we’ve seen billions of lost value in a short period of time, especially when it comes to the marijuana stock market. We all know that Corona is the culprit for the significant dive in marijuana stock values across the board, but that doesn’t change the fact that it’s happening. There have been a lot of rumors going around and tons of speculation about what is to come of weed stocks once things “get back to normal” - that is, if they ever fully get back to normal. Although it’s hard to say exactly what will happen, it’s possible to make educated guesses based on how each weed stock performed in the past combined with how each one has been affected by these crazy times. Here’s what you need to know.
The Trend of Cannabis Stocks Before the Crash
Directly following the passing of the Cannabis Act, the value of pot stocks in Canada saw an all-time high. But as a whole, this industry has struggled due to more difficult access to traditional funding. Part of this is because recreational weed is still illegal at a federal level in the US, so banks and credit unions aren’t willing to dump loads of money into the industry just yet. Although cannabis is now completely legal federally in Canada, banks are still hesitant to lend to companies dealing with weed on any level. Banks label these companies as “high-risk” even though there’s not that much risk involved. Because of this, many weed stocks never really met their full potential… and then the crash happened.
The Effects of the 2020 Crash
Overall world markets have taken a huge hit, so it’s not just the cannabis industry. It seems as though the biggest pot stocks have suffered the most, like Canopy Growth (CGC). In just 3 weeks, CGC lost about 30% of its value. Other pot stocks have taken similar hits, some more and some less. There are, of course, some weed stocks that are still keeping their heads above water following the March 2020 crash. These are a few of the most well-off stocks that have managed to survive (even thrive) over the past several weeks:
OrganiGram Holdings (OGI)
OrganiGram Holdings is popular among recreational growers of Canada as well as medical growers with their ACMPR licenses. OGI isn’t the wealthiest company in the cannabis stock market game, but it has a few competitive advantages over the big guys. One of these advantages is that OGI has wholesale agreements in every Canadian province, including the eastern Atlantic area where no other major cannabis producer resides. On top of that, OGI uses a highly efficient three-tiered cultivation system that produces greater yields on average than its competitors.
Trulieve Cannabis (TCNNF)
It looks like Truelieve will have no trouble pushing past the crash with flying colors. This is mainly because TCNNF focuses the majority of its attention on Florida (out of their 47 dispensaries, 45 of those are located in Florida). This methodology of focusing on one geographic location seems to be paying off for Trulieve.
MediPharm Labs (MEDIF)
MediPharm is a Canadian-based extraction service that specializes in providing cannabis users with alternative consumption methods. This includes everything from edibles and infused beverages to pain-relieving topicals. Products like this haven’t been available in Canada since recently, so MediPharm Labs products have a competitive edge.
Green Thumb Industries (GTBIF)
Green Thumb Industries is another top performer in the cannabis stock market, even with all that’s going on. GTBIF has been steadily expanding, but the company has been doing it in a smart way. Even with the expansion, they haven’t overextended themselves with their acquisitions. Many companies accumulate a lot of debt in this process, but not Green Thumb. Although Green Thumb is doing quite well considering the circumstances, no one knows for sure if their good luck will continue. They’ve recently acquired some business in Nevada, and the lack of tourism sales might cause them to take a hit. But these cannabis predictions are up for debate.
Innovative Industrial Properties (IIPR)
Innovative Industrial Properties is based in the US and the company is a cannabis real estate investment trust. Stock market experts strongly feel that IIPR stocks will have no trouble surviving this crash, and the official numbers support this as well. The main thing to remember is that this crash will pass eventually, and although some companies might not make it to see the other side, many of them will. If you’re itching to invest in weed stocks right now even with the global pandemic affecting finances left and right, your best bet is to look into one of the 5 mentioned above.Image by NickyPe from Pixabay
Discover Hidden Gems
Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.
