One of the most recent striking events in the “pot” market has been a first step towards the potential removal of cannabis from the list of controlled substances in the United States.
So far 11 US states legalized it for recreation and 33 for medicinal use.
The House Judiciary Committee has opened the door for the potential legalization of cannabis on a federal level after its approval of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019, passed with bipartisan support.
It is the first time in the U.S. history that there is a real chance that a particular drug will be legalized and this is huge news for the cannabis industry.
While there’s still a long road ahead, as Congress has to ultimately pass the bill and approve it to fully enforce the legalization, cannabis investors are already starting to forecast the impact that this bill could have on the industry’s profitability and growth.
Therefore, if you are also seeing the potential of this investment opportunity in this crucial moment of its history, here are 5 pot stocks to watch in 2020 to cash in if the legalization does materialize.
#1 – Canopy Growth, Corp. (NYSE: CGC)
Canopy Growth (based in Canada too) is another major player in the CBD and marijuana markets and they have already stepped in the U.S. market directly after they completed the acquisition of Acreage Holdings Inc., a company based in the U.S. with licenses in nine different states to commercialize marijuana and CBD products as well.
This move has been highly strategic as the company now has its two feet in the U.S. markets and could cash in big if regulations are lifted and the market is fully opened.
They have relied on the popularity of various celebrities to advertise their products through endorsements and the company has a market cap of around $9 billion.
#2 – Cronos (NYSE: CRON)
Cronos is known for being a market leader when it comes to introducing innovative CBD products. The company invests heavily in research to potentially win the race to standardize CBD products to gain the public’s trust and it has been backed by major players in other similar industries such as big tobacco. They recently received a significant investment of $1.8 billion from Altria Group Inc. and the potential to continue growing is endless if they have such backers on their side.
This kind of alliances would open the door to Cronos to introduce their innovative products to the U.S. markets and the company currently has a market capitalization of around $4 billion.
#3 – Tilray (NYSE: TLRY)
Tilray is among the most attractive pot stocks right now as it is one of the best positioned companies in the industry with a presence in top markets including Canada, Australia, the United Kingdom, Germany, and the U.S.
Tilray has established key partnerships that have contributed significantly to its growth including an investment from Anheuser-Busch InBev to research the possibility of producing non-alcoholic cannabis-infused beverages.
Additionally, it also partnered with Authentic Brands Group LLC, a major outlet of CBD and marijuana in the U.S. with more than 4,500 stores countrywide.
#4 – Aurora Cannabis (NYSE: ACB)
Aurora is a direct rival of Canopy Growth and a major player in North America’s marijuana and CBD market and they have outpaced their peers by volume of cannabis sold to the public.
While the stock has struggled since the company has fallen behind in some of its fundamentals, its reach and size enable the company to take advantage of any positive turn of events such as this recent legalization trend.
#5 – Aphria, Inc. (NYSE: APHA)
This Canada-based pot company has already gained a significant market share in its domestic market by selling both CBD and marijuana products and it is a part of the elite club of firms that have already been approved for a license to operate in every single province in the country.
The company has also established an alliance with Southern Glazer’s Wine and Spirits, a large wine distributor in the U.S., to enter the American market and this means that the legalization of pot could be a huge deal for Aphria as it will enable the company to ship its products to the U.S. right away.
Their experience in the Canadian market will probably help them in gaining the trust of consumers as they have already shown they have the capacity to fulfill regulatory requirements in a neighboring economy.
Aphria is sitting on an $80 million cash pile that they are probably ready to invest once an opportunity as promising as this one unfolds.
Bottom Line
All of these stocks offer the potential of a 3-digit price increase over the next 12 months due to their capacity to benefit significantly from a legislative shift and. Additionally, this appears to be a good moment to step in as pot stock prices have tumbled during the last 6 months, as shown by the BetaPro Marijuana Companies 2x Daily Bull ETF which has tumbled from $21.01 to $2.94.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
