As the Canadian people wait for the courts to decide about the legalities of pot, many think that it is highly probable that the Trudeau government will legalize marijuana for recreational use nationwide. Following the example of many states in the US, the entire Canadian countryside might soon be free to smoke at will without any legal repercussions. What that means for the average citizen is a whole lot more freedom of choice. What it could potentially mean for investors looking for a way to reap benefits and grow some major capital could be exponential.
The red-hot market of Canadian real estate is not making many forecasters comfortable. Even with measures taken by the government to cool things down and to slow the bubble from growing, there seems to be no end of growth in sight. But what economists know about investing Winnipeg, is that what goes up must come down, and as quickly as the real estate market has increased, it is likely to crash in just as fast. That has many investors wanting to put their money elsewhere.
If the government does legalize recreational marijuana usage, that could mean a huge supply problem in the future. That could translate to the fact that those who get in on the ground floor, while all the specifics are being sorted out, could stand to make a whole lot of money. If there is an end to prohibition, Canada will become the second country in the world to legalize weed for recreational purposes, with the only other being Uruguay. What that also means is that the production of it is going to increase tenfold.
A lot of legalities such as who can use pot, and at what age, all need to be answered; it won’t be an immediate switchover from one policy to another. But if the policy is set in motion, things are going to move very fast, and if you want to get on the train, then the quicker you do the more you stand to profit.
If Canada goes green, the first place that investors should look is in stocks. According to the latest statistics, if Canada legalizes recreational pot usage, then the government could potentially generate as much as $5 to $7 billion in annual revenue and sales. Three established medical cannabis companies are already supplying Canada and the US, and they could find themselves in an instant windfall and in need of some capital to keep up. The three marijuana stocks already set in place are Aphria, Canopy Growth Corporation and Aurora Cannabis.
The companies differ in the production methods of the cannabis they produce. Canopy Growth has expanded their operations by acquiring smaller growers, while the other two have chosen a more organic path to growth.
Canopy Growth is responsible for the largest percentage of the cannabis stock market. Just last year the company announced its intention to acquire Mettrum Health to the tune of over $430 million. That would give them access to as much as 50% of the medical cannabis user population, and would also give them the capacity to expand to fill the need for the recreational crowd if it becomes legal.
Aurora and Aphria Cannabis are also working on a substantial expansion of their current operations. They are increasing their growing space and expanding their facilities to keep up with both their current demand, and potential growth in the near future. These companies are great stock bets because, unlike other facilities that will try to jump on the bandwagon, they have the equipment and are already in production. With record sales, they are already profitable, and the proof is there that there is no stopping them once the floodgates open.
What any investor knows is that if you don’t buy at the bottom of the rise, you are buying too late. Taking a gamble on the legalization of pot for recreational use in Canada might be a risk, but one that is well worth taking. With assets already accumulating and profits expanding even if marijuana doesn’t go legal, it is still a winning proposition for medical purposes. If it doesn’t expand exponentially, it is still a safer bet than avenues like the real estate market.
