How Are Cannabis Stocks Doing?
Cannabis stocks experienced a major run in the lead up to the legalization of recreational cannabis in Canada in late 2018. The share prices of many marijuana stocks soared in excess of 500%. Investor optimism may have gotten ahead of itself though; the broader cannabis industry has been bearish since April 2019. Despite what the weed bears say, this doesn’t mean that marijuana industry isn’t doing well. It’s the complete opposite. Cannabis sales are experiencing massive growth, and the industry continues to provide investors with huge potential for massive profits.
The marijuana industry is in its infancy. Recreational cannabis sales have only been legal in Canada since October 2018. Adult use cannabis might be legal in 11 U.S. states, but it’s still illegal on the federal level. As expected, the pot industry is experiencing growing pains. Marijuana bears are quick to say the cannabis industry isn’t living up to expectations. Despite the negative sentiment, cannabis sales have been soaring. In 2019, global marijuana sales were stunning, and that momentum is expected to continue.
In 2019, marijuana sales soared 48% year-over-year to $15 billion. That’s huge growth despite regulatory challenges that hurt business activity in Canada, the U.S., and other markets.
Of those sales, a whopping 81% came from the U.S.; a country where adult-use cannabis is legal in just 11 states and medical marijuana is legal in 33 states. In the U.S., recreational adult-use pot sales were up 45% in 2019 at $8.9 billion. Medical marijuana sales advanced 54% year-over-year to $6.2 billion.
How Much Marijuana Is Sold in Canada?
What about Canada? Between October 2018 and September 2019, cannabis sales came in at approximately $910 million. Ontario was the top province, selling $216.8 million in cannabis. Alberta, the province with the most dispensaries, came in second, at $195.7 million. Those numbers are only going to get bigger.
In November 2019, marijuana’s growing contribution to the Canadian economy eclipsed every other major area of the Canadian economy. In November, Canadian cannabis sales increased 15% year-over-year to more than $7.4 billion.
Admittedly, total cannabis revenue is small compared to the broader Canadian economy; accounting for just 0.4% of the country’s monthly gross domestic product (GDP). Still, cannabis is one of the bright spots, Canada’s entire GDP was up just 1.5% in November.
What Is the Outlook for Marijuana Sales?
Cannabis sales are expected to remain exceptionally strong. In 2020, marijuana sales are expected to climb 38%. Some of that growth will comes from mature markets and new markets. On January 1, Illinois became the 11th state to legalize recreational cannabis in the U.S. Over the first 12 days, the Land of Lincoln sold $20 million worth of pot with some stores running out of product.
By 2024, global weed sales are projected to top $43 billion. That represents a compound annual growth rate of 23.45%.
There is a disconnect with global cannabis sales and what North American marijuana stocks are doing. But that will not continue; after all, numbers don’t lie. And not even the most ardent stock market bear will not want to miss out on that kind of growth opportunity.
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