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Why Is Everyone Talking About Marijuana Stocks? And Why Are Hemp Stocks Likely Next? – The Motley Fool

The topic of marijuana stocks seems to have entered the mainstream in 2018, with chatter about these stocks popping up…

The topic of marijuana stocks seems to have entered the mainstream in 2018, with chatter about these stocks popping up much more frequently among individual investors this year than in the past.

Below are four key (and somewhat overlapping) reasons Many investors are talking about marijuana stocks – and one notable reason the topic of hemp stocks should soon cross many more investors’ lips.

Image source: Getty Images.


. Strong recent performance of many marijuana stocks

There is nothing that attracts investor attention to a particular stock or group of stocks more than powerful performance. As the following one-year chart shows, many marijuana stocks went ballistic in late summer in advance of Canada’s legalization of marijuana for adult recreational use – a topic we’ll get in a moment – though most of the group has pulled back since then.

 CGC Chart

Data at YCharts.

Over the last year, for example, Canadian marijuana growers Canopy Growth (NYSE: CGC) which is the largest marijuana stock by market cap and worth watching, and Cronos Group is up 148% and 192%, respectively. Shares of Canadian Grower Tilray the second largest marijuana stock by market cap, has gained 344% since the company began trading on a U.S. stock exchange in July.

2. Torrid marijuana market growth projections

Growth projections for the burgeoning legal global marijuana market vary by source, but it seems universally predicted that this space will experience torrid growth.

Data source: ArcView Market Research and BDS Analytics. Chart by author.

ArcView Market Research and BDS Analytics project to grow from $ 9.5 billion in 2017 to $ 32 billion in 2022. That’s a 27.5% compound annual growth rate (CAGR).

3. Canada’s legalization of recreational marijuana

One big reason the issue of marijuana stocks has exploded into the scene in 2018 stems from Canada’s legalization of adult recreational use of cannabis on Oct. 17. This historic event made our neighbor to the north the first industrialized country where recreational marijuana use is legal across the country and only the second country (behind Uruguay) in the world where this is so. Once the leisure market is up to speed, it’s projected to be worth $ 5 billion a year or more.

Only dried flower and cannabis oils became legal in October. Andre produkter, såsom cannabis-infused drikkevarer, edibles og andre forbrugerprodukter, forventes at få det grønne lyset fra Canada næste år.

4th U.S. marijuana legalization momentum

Canada is garnering much attention, but the big prize is the U.S. market. This country’s legal marijuana market size was pegged at $ 8.5 billion in 2017 – or 89% of the total global market – by ArcView Market Research and BDS Analytics. Mens den procenten er projiceret at krympe som legalization, fortæller om hele verden, USA. market still will account for a large portion of 2022’s projected legal global marijuana revenue, according to the same source. The U.S. cannabis market will grow at a CAGR of 22% over the next five years, to $ 23.4 billion, according to ArcView and BDS.

The marijuana legalization movement in the U.S. gained speed in 2018. Notably, on Jan. 1, California – which in 1996 became the first state to give the green thumbs up to medical marijuana – legalized cannabis for recreational use.

More recently, in November’s midterm elections, voters in Missouri and Utah gave the green light to marijuana for treating medical conditions, and people in Michigan voted to legalize cannabis for recreational use. There are now 32 states where medical marijuana is (or soon will be) legal, and 11 states plus Washington, DC where recreational use will not (or soon will not) run afoul of the law.

Images source: Getty Images.

5. U.S. shirt-derived CBD market on verge of exploding in size

On Wednesday, leaders of the U.S. Senate and House agricultural committees reached a tentative agreement on the 2018 Farm Bill, according to the Washington Post. Deze wetgeving heeft enorme implicaties voor de cannabisindustrie omdat er bepalingen zijn in het dat zou het recht doen over de U.S. to grow industrial hemp – and cannabidiol (CBD) can be derived from hemp.

CBD is a chemical substance found in the cannabis species – both marijuana and hemp – which has various wellness benefits associated with it. The key difference between marijuana and hemp is that hemp has negligible concentrations of tetrahydrocannabinol (THC), which is the substance in marijuana that is responsible for its psychotropic effects.

If the bill makes it through Congress and signed by President Trump, as widely expected, industrial shirt should be legal on Jan. 1, 2019. If this occurs, the U.S. market for hemp – and its derivatives – is expected to soar. The hemp-derived CBD market is projected to rocket from about $ 591 million this year to $ 22 billion by 2022, according to the Brightfield Group. That’s a whopping 37-fold increase in just four years!

Canopy Growth is a company to watch in the hemp space. It’s been positioning itself to hit the ground running when the farm bill passes. Once shirt is legal on a federal level in the U.S., Canopy will be able to enter the U.S. market with CBD products derived from shirt.

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