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Legal U.S. Cannabis Sales Up 30% This Year, With Room to Grow

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America’s retail marijuana sales rose sharply this year, with signs that legislative reform is poised to boost the industry even further in 2018.

U.S. Sales Surge in 2017

Legal U.S. pot sales rose 30% in 2017, according to the Marijuana Business Daily’s annual report. Based on the Daily’s previous projections, that’s equivalent to $5.1 billion to $6.1 billion in total revenue. Sales are projected to reach between $6.7 billion to $8.8 billion in 2018 for a gain of at least 31%. Projections show the industry could top $17 billion by 2021, with sales largely concentrated in recreational pot. These numbers are in line with previous forecasts conducted by Arcview Market Research, which showed legal cannabis sales could top $20 billion by 2021.

The following chart illustrates the industry’s projected growth over the next four years.

Source: Marijuana Business Daily. Marijuana Business Factbook 2017.

Even with recreational sales surging, the medical sector is also expected to contribute to the expansion. The Daily has previously cited Maryland and Hawaii as positive contributors to the medical industry’s projected growth. At the same time, medical marijuana industries in Illinois, Nevada and New York appear poised for further gains as these markets mature.

Legalization Drive Boosting Sales

Marijuana sales are expected to rise significantly in the future now that several U.S. states have voted to legalize recreational pot. This likely explained the market’s robust expansion between 2016 and 2017, and why the industry is expected to surge well into the future.

Cannabis stocks have also been on a tear ahead of the planned legalization of recreational weed in the state of California. America’s most populous state was one of a handful of jurisdictions to vote in favor of recreational pot during the 2016 presidential election cycle.

California’s recreational cannabis market opens in January, with some analysts expecting wholesale weed to cost more than $500 a pound. Prices are expected to drop almost immediately because wholesale supplies will be limited. Only about 25-30% of the Golden State’s municipalities have agreed to support the industry.

Regulatory Hurdles

Though business may be booming, tension between state and federal regulation is expected to weigh on the market. Under existing legislation, recreational programs like those administered in California are in violation of federal laws.

The Trump administration in recent months has been silent on the subject of recreational marijuana, but its first public comment on the matter implied greater enforcement of federal regulations. Federal legislation limits marijuana businesses in their quest for financing. It also creates uncertainty, which could limit business expansion and investment.

In addition to regulatory bottlenecks, wholesale growers face stiff competition from a saturated market, especially in more established markets like Colorado and Washington. The Daily reports that production in these states has outpaced demand despite a steady rise in consumption. This will likely keep wholesale cannabis prices subdued, making it more difficult for businesses to enter the space.

That being said, recreational weed has been described as a generational opportunity. In addition to the seven states that legalized marijuana during the 2016 election, several others are holding public debates on the matter. These states include Delaware, Rhode Island, New Jersey, Vermont, New Mexico, Texas, Missouri and Kentucky.

Featured image courtesy of Shutterstock.

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4.6 stars on average, based on 602 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Canada Goes Green as Senators Approve Recreational Marijuana Bill

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Canada will become the first G7 nation to legalize recreational marijuana after a Senate vote Tuesday night cleared the final hurdle to a ceremonial approval later this year.

Canada Goes Green

The upper chamber voted 52 to 29 in favor of passing Bill C-45, a controversial proposal to end the generational ban on recreational pot. The Senate passed the bill mere days before a Parliamentary recess began, paving the way for implementation by the end of summer.

It is unclear when Bill C-45 will receive ceremonial approval by the governor-general – the final step before it becomes law – although ministers said an additional 12 weeks beyond that may be required before retail sales begin.

Prime Minister Justin Trudeau took to Twitter Tuesday to announce the Senate’s decision:

“It’s been too easy for our kids to get marijuana – and for criminals to reap the profits. Today, we change that. Our plan to legalize & regulate marijuana just passed the Senate. #PromiseKept.”

Investors Look to Get High on Canadian Weed

The Senate’s decision makes the world’s eleventh-largest economy an attractive destination for yield-seeking investors looking to capitalize on an industry with high-growth potential.

Canadians spent $5.7 billion on marijuana last year, according to the government’s top statistics agency. The nation’s 5 million pot consumers doled out an average of about $1,200 on the green plant and its derivatives, with 90% of the proceeds going to the black market. By comparison, Canadians spent just over $22 billion on alcohol and $16 billion on tobacco products.

This year, Canadians are expected to consume about 474 metric tons of marijuana flower, according to GT Research, a cannabis analytics company. Consumption is expected to reach roughly 861 metric tons in four years.

Research from Deloitte suggests legal pot sales in Canada will exceed $7 billion. However, the economic footprint is expected to be much larger. When factoring direct and indirect activity, legal weed could generate up to $22.6 billion in economic value.

The end of prohibition, once confirmed later this year, will take the weight off marijuana producers that have wagered big on legalization. After a flurry of consolidation domestically, Canadian producers are now setting their sights on countries like Italy, Spain and Colombia for expansion.

The Canadian weed landscape has experienced “merger madness” over the past 12 months, with larger firms snatching up smaller players in a series of moves. Aurora Cannabis Inc. (ACB) recently acquired MedReleaf Corp for $2.9 billion. In January, it agreed to buy CanniMed Therapeutics Inc. for $1 billion.

Canada is now home to over 90 publicly-listed marijuana producers collectively valued at more than $31 billion. The top-24 producers capture about 88% of that market. The biggest pot stocks are listed on the Canadian Marijuana Index, which is nearly four times bigger than the U.S. index despite America being ten times greater in size.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 602 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Marijuana Stocks Trade at Four-Month Highs as Canadian Senate Approves Cannabis Act

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North America’s marijuana index is riding high once again after one of the world’s biggest cannabis markets moved one step closer to full legalization.

Canada’s Senate Passes Cannabis Act

Canada’s cannabis bill passed third reading in the Senate last week and in doing so overcame one of the last critical hurdles to full legalization of recreational marijuana. Bill C-45, the so-called cannabis bill, was approved by a vote of 56-30 with one abstention.

The amended bill goes back to the House of Commons, where Liberal Members of Parliament will determine which amendments to keep and which to omit before sending it back to the Senate. Once the bill is passed, provincial governments will have up to three months to prepare for full implementation of the law. At that point, recreational cannabis will be available for sale. According to various studies, the sale of recreational weed will open up a multi-billion-dollar industry.

However, it’s not entirely clear how long the Liberals will need to review the amended bill before sending it back to the Senate. There are currently three ministers looking over the amendments. Although most Senate amendments are minor, about a dozen stick out as significant impediments to implementation.

For cannabis companies, this could mean many more months of uncertainty. However, in the grand scheme of things, the passing of Bill C-45 is a major breakthrough for businesses that have gambled heavily on the legalization of recreational pot.

Marijuana Stocks Rise

After initial trepidation, marijuana stocks have risen sharply since Canada passed Bill C-45. However, the bulk of the gains have been concentrated south of the border, a sign that investors were becoming more optimistic that the Trump administration would continue to back off states seeking to legalize recreational cannabis.

The North American Marijuana Index, which tracks 41 companies in Canada and the United States, rose 1.8% on Monday to $277.70. That was its highest settlement since Feb. 15.

Shares of marijuana companies have gained 10.6% over the past month but are still well below peak levels from early January.

All of the gains Monday came from U.S. companies, with the likes of MariMed Inc. (MRMD), CV Sciences Inc. (CVSI) and WeedMD Inc. (WMD) putting up large gains. The U.S. Marijuana Index jumped 5.3% to $110.04, its highest since late January.

Canadian cannabis stocks fell 1.5% on Monday, their third consecutive down session. The Canadian version of the marijuana index, which contains 24 companies collectively valued at $26.2 billion, rose to more than two-month highs ahead of the Senate vote on Bill C-45.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 602 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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The Biggest Marijuana Merger Ever Lifts Cannabis Stocks

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An expected merger between Canada’s Aurora Cannabis and MedReleaf propelled marijuana stocks higher on Monday, sending a strong signal that consolidation is afoot ahead of planned legalization this year.

Biggest Merger Ever

Aurora Cannabis, one of Canada’s biggest marijuana companies, is set to purchase MedReleaf in an all-stock merger worth $2.2 billion. According to an official statement, the deal will enable the newly merged company to produce 570,000 kilos (1.26 million pounds) a year of cannabis across nine facilities in Canada and two in Denmark.

The deal is expected to be finalized in August, just a few months before the Canadian government legalizes recreational pot. Canada was set to legalize the drug on July 1 but a series of bottlenecks pushed back the date until the fall.

Under the deal, Aurora will offer MedReleaf shareholders 3.575 shares in Aurora in exchange for every unit in MedReleaf they hand over.

“It gives us a footprint in Ontario, it prepares us properly for the adult usage market, the strains that MedReleaf has managed to grow are the leading strains in this country, arguably in the world,” said Terry Booth, Aurora’s CEO.

Ontario is Canada’s most populous province, accounting for roughly 40% of the nation’s gross domestic product.

Aurora Cannabis and MedReleaf are the second and fourth largest Canadian marijuana companies by market capitalization. Combined, they have the potential to outgrow industry leader Canopy Growth Corporation, which is currently worth $6.45 billion. Taking today’s prices into account, the newly merged company is capitalized at more than $7 billion.

That said, Aurora Cannabis has emerged as the largest pure play cannabis company in the world, earning that distinction through a series of key acquisitions. By purchasing MedReleaf, the company has given itself a strong foothold in the medical marijuana sector.

Marijuana Stocks Outperform

North America’s marijuana industry gained on Monday, as news of the Aurora-MedReleaf deal made its way to investors.

The North American Marijuana Index rose 2.2% to close at $256.64, its highest settlement in a month.

MariMed Inc. (MRMD) and OrganiGram Holdings Inc. (OGI) were the top performers, gaining 14.4% and 11.1%, respectively.

Cronos Group (CRON) jumped 7.2% and Canopy Growth Corp (WEED) added 6.9%.

Merger news failed to lift Aurora Cannabis (ACB), as share prices fell 2.1% on Monday.

The Canadian Marijuana Index, which is capitalized at $24.41 billion, rose 2.9% to $660.35. Meanwhile, the $6.82 billion U.S. Marijuana Index added 1.2% to finish at $90.20.

Cannabis stocks outperformed Wall Street by a wide margin on Monday. The S&P 500 Index gained just 0.1% during the session.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 602 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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