Canopy Growth Is the Play for the Budding Cannabis Industry Political Tailwinds
Cannabis has moved one step closer to federal legality, as a bill to decriminalize marijuana passed the U.S. House of Representatives recently. This is the first time a decriminalization bill has passed a chamber of Congress. The MORE Act (Marijuana Opportunity Reinvestment and Expungement Act) is highly unlikely to pass in the GOP-held Senate, however.
While the majority of U.S. states have legalized either recreational or medical marijuana, it still remains illegal at the federal level.
President-elect Joe Biden is for decriminalization of marijuana, but has been against full legalization in the past. There is a chance that his constituents and cabinet will sway his opinion in the future as well.
Overall, the climate for cannabis legalization is improving, and therefore Canopy’s prospects are improving too.
A Strong Quarter
Canopy posted record net revenues and improved operational efficiency last month, which surely helped to bolster CGC stock prospects. The company has been losing money on a continuous basis quarterly. This past quarter was no different with Canopy posting a net loss of $97 million. However, EBITDA improved by 43%. Early companies tend to lose money, and markets tend to reward those that can stanch the bleeding quickest. That Canopy posted record net revenues was probably the bigger factor, however.
Even though Canopy has performed well as of late, Wall Street remains neutral on CGC stock. This is logical from the viewpoint of cannabis’s federal standing, taken in concert with the company’s profitability issues.
I, however, feel that Canopy is in prime position to rise, and for readers who want to get into cannabis stocks, this one has momentum and a great chance to be a big name in the space for a long time.
Mindshare
Canopy has a goal of “winning consumer mindshare” according to CEO David Klein. And to that goal, the company has recently undertaken a flurry of efforts to make its name more well-known. It released a line of CBD gummies in conjunction with Martha Stewart, hoping to capitalize on the Christmas season.
Canopy also has a 72% ownership stake in sports-drink producer BioSteel, which has been partnering with influencers to increase brand reach. BioSteel is also the official drink of NBA team the Dallas Mavericks.
Canopy is gaining good traction through BioSteel. Although BioSteel is cannabis-free, there may very well be plans to use BioSteel as a springboard, should CBD be approved across the board. Canopy would then have the massive “mindshare” that it desires.
Just imagine a BioSteel CBD drink that would likely be promoted across NBA channels. The profits would be very high.
The Verdict on CGC Stock
Canopy is a growth company headed in the right direction. The company has strong tailwinds in many forms and really makes sense from several angles. While Wall Street may be hesitant to fully endorse this company, I believe it is going up.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Canopy Growth Is the Play for the Budding Cannabis Industry (msn.com)