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Pot Stocks Not Up In Smoke After Legalization | SOHAZY

When recreational weed finally became legal in Canada, pot stocks saw a huge run up in the three months leading up to the prohibition lift. With companies like Canopy Growth Corporation and Cronos Group nearly doubling in share price, and Tilray, Inc. exploding by over 400 percent.

After the day came however, Canadian-based pot stocks saw mostly negative price action.

The small sell off is due to traders locking in profits without a major catalyst in sight. It’s clear pot stocks are not going up in smoke after legalization.

Pot Stocks Not Up In Smoke After Legalization

While weed stocks will likely have a few victors who are able to provide investors with long-term growth and substantial returns on their investments, in the near-term, it looks like any upward price action will be minimal.

Investors should be ready to stick it out and see some ups and downs as the industry grabs its footing.

There are a number of key concerns for weed companies, which aren’t being discussed among bullish investors: an existing and tax-free black market, restrictive legislation keeping high-margin products of the shelves, the cottage industry of cannabis seen in legalized U.S. States, and supply shortages among others.

Many of the cannabis companies on investor’s radar today will go up in smoke as the industry settles. A clear winner, according to most analysts, is Canopy Growth Corporation.

The company is expected to have a huge market share of legal cannabis flower in Canada as the fallout from legalization kicks in.

Constellation Brands

Additionally, they have an existing relationship with alcohol manufacturer and blue-chip company Constellation Brands.

Constellation currently owns around 38 percent of the company, as well as warrants that will allow it to purchase a controlling stake in the future.

Canopy CEO Bruce Linton says that he hopes that the emerging industry grabs it’s footing and is a catalyst for innovation, comparing it to Silicon Valley in the early days of the Internet. Said Linton:

“We’re willing to make more mistakes than any other cannabis company. For a while.”

The next company that is likely to rise to the top as the industry settles is Aurora Cannabis. The grower is expected to far surpass all others in terms of supply capacity.

They are currently able to grow up to 45 thousand kilograms at the moment, and expect that number to grow by more than 300 percent before the end of the year.

The company has currently been trading on over-the-counter markets, but is expected to open on the New York Stock exchange this week.

“Our NYSE listing represents another important milestone that reflects our commitment to all stakeholders as we continue advancing domestic and international growth initiatives, which includes expanding our base of global institutional and retail investors,” said Terry Booth, CEO of Aurora in a press release.

At this point in time, most cannabis companies have a huge amount of short interest with traders waiting on each negative piece of news

That news could relate to supply issues, slumping sales as novelty decreases and the black-market becomes favorable again, and competition from small growers.

With the current amount of short interest however, any positive news for pot companies will likely work to be a major, short squeeze initiating catalyst.

Pot Stocks Not Up In Smoke After Legalization

One poy stocks catalyst that is right around the corner is the NYSE listing of Aurora Cannabis.

The new listing will likely bring a wave of retail investors who aren’t trading on the OTC markets and related stocks like Canopy will feel a surge as well, sending the shorts running.