We’ve entered into a new phase of cannabis investing, and by knowing what to keep of track of now, you have the chance to find the best long-term profit opportunities. Things were already happening fast in this industry, and they’re about to get faster still.
In the next six months, there are three things I want you to watch very closely.
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Mergers
The merger mania we’ve seen lately is kicking off what you’ve seen me refer to as “Phase 2.” In this phase, we see massive consolidation. Smaller companies start merging, and bigger companies will acquire smaller ones.
By the end of 2019, we’re going to see a lot of consolidation.
The opening phase of cannabis investing was exciting, but it will pale in comparison to what Phase 2 has in store. Companies can buy their way into new markets and turn into revenue-generating powerhouses.
That will bring more retail investors in, helping cannabis stock prices climb.
And I want to remind you again about Canopy Growth Corp. (NYSE: CGC), because they kicked this phase off with the purchase of Acreage Holdings (CSE: ACRG, OTC: ACRGF). The deal will only close when the U.S. legalizes cannabis, and to me that’s a sign legalization is imminent.
When I met with my staff, I told them that a lot of people said they knew Microsoft was going to be the next big thing in the 1990s.
But how many of those people actually bought stock?
With Canopy, we have the exact same thing.
Legalization
Speaking of legalization, we are going to see a lot of efforts to reverse cannabis prohibition.
That could mean baby steps for some states, but even baby steps can mean a giant leap forward.
Texas lawmakers recently approved a decriminalization bill, Illinois could legalize recreational marijuana soon, and New York and New Jersey are still slugging along towards recreational approval.
The SAFE Banking Act and the STATES Act both have a strong possibility of passage this year, and there’s going to be a lot of cannabis legalization news to keep track of as we head towards 2020.
Earnings
With the most recent earnings we’ve seen for full year results for 2018, keep in mind that cannabis was only just legalized in Canada in October 2018.
That means 2018 didn’t provide a full picture of what was really going on.
Also, remember that that when legalization first rolls out, there are usually some hiccups. Dispensaries are still waiting on licenses, and supply is normally not able to meet demand right out of the gate.
On top of that, some companies were still waiting for acquisitions to close when they last reported earnings. That means they couldn’t count the revenue from those acquisitions in their reports.
Again, that limits the true picture of what is going on with cannabis earnings.
Now we have two full quarters of full legalization in Canada, and we can also see how the 2018 Farm Bill has impacted CBD sales, as it was just passed in December 2018.
This time of year is a particularly fast-paced period for earnings announcements. Because companies have extra time to prepare their year-end financial reports, Q4 reports and the Q1 reports just about run into each other.
And now that the last few companies are reporting those Q4 earnings, we’ll see Q1 earnings start to stream in. Full story at NICI.
I’m going to be updating you on all three of these things when the biggest news breaks, as they are the storylines every successful cannabis investor will be watching. All of this put together will make cannabis investing more profitable than ever before, and I’m glad you’re here with us on this journey.
