US Cannabis Industry Taking Shape While Eyeing the Future
Don’t be fooled by the relative quiet and unease you hear in the marijuana market at the moment.
After realizing big gains in revenue during the COVID pandemic, cannabis stocks have levelled off a bit in 2021. But many analysts believe it’s a sleeping giant. What’s more, the inaction may make right now a good time to get in on U.S. cannabis stocks.
The federal cannabis legalization train has left the station, and it’s not making a round trip. Eighteen U.S. states and the District of Columbia have legalized all cannabis use and many others have given the green light to medicinal marijuana. Public opinion has shifted overwhelmingly in favor of legalization, with 90% of all Americans believing that either medicinal or all marijuana use should be legal in every state.
More importantly in the short term, the marijuana industry is starting to settle. After years of hemorrhaging money, cannabis companies are beginning to see the light of day. Experts believe marijuana sales will close 2021 up 23% and will maintain growth into 2022.
All of this potential comes after years of growing pains in the U.S. cannabis industry. Cannabis companies have incurred billions of dollars in debt for development and expansion. Marijuana start-ups in legal states have come and gone. The patchwork cannabis industry has struggled to find its footing.
But these difficulties are common to new business sectors throughout stock market history. The simple fact now is that the cannabis industry is maturing.
Cannabis Companies Become Real Businesses
U.S. cannabis companies are merging and expanding. They’re especially active in acquisitions, as many cultivators and distributors become more vertically aligned by investing in smaller operations.
These American companies are outperforming cannabis operations in Canada, where marijuana has been legal since 2018. Curaleaf (OTC: CURLF), Trulieve (OTC: TCNNF), and Green Thumb Industries (OTC: GTBIF) all earned at least $500 million in sales each last year. The top 10 multi-state operators in the marijuana industry net $3.3 billion in profits in 2020 — a 139% increase from 2019.
While Canadian companies have garnered plenty of hype since national legalization, the U.S. market is a much bigger playing field. But as of now, Canadian and international cannabis companies are the only ones that live on American stock exchanges.
Legalization is the Key
Once cannabis legalization is the law of the land in America, expect the cannabis industry to explode. Legalization is inevitable, despite the presence of a few nervous legislators. Certainly, the public wants it. Cannabis companies have assembled their business models in anticipation of it.
As investors wait for legalization to finally arrive, they feel more confident and safer about investing in major cannabis players. This comparative lull in the market just might be a great point to enter the cannabis stock market. Once a fledgling industry that most analysts scoffed at, the cannabis industry is finally one to take seriously.