This year, the pot industry is worth more than a quarter billion dollars. The legal industry is growing, too, with cannabis dispensaries, marijuana related businesses, and related sites growing in popularity. While this industry is not new, it is still in its early stages, and the future holds many opportunities for investors.
Cannabis is a popular topic among investors these days. It’s true that most marijuana stocks have been in a long downtrend since 2015, but this is starting to change.
I’m sure you’ve heard by now about the growing number of legal marijuana dispensaries happening in the United States. But do you know which ones are the best for your portfolio? Just like any investment, the best marijuana stocks out there will vary based on your investment strategy, risk tolerance, and personal preference. But that doesn’t mean you can’t find them.
Close-up shows the folded flags of Canada and the United States of America.
Are Pot Stocks from the United States or Canada Right for You?
In the marijuana business, there is a false distinction between US and Canadian marijuana stocks. In the sense that both types of marijuana stocks may flourish in the emerging market, this is incorrect.
On the other hand, the distinction has some truth in that the two kinds of marijuana stocks act differently.
Allow me to elaborate.
Let’s start with the basics: what marijuana stocks in the United States and Canada have in common.
Commonalities Between U.S. Marijuana Stocks & Canadian Marijuana Stocks
Pot stocks in the United States and Canada are both rooted on the legal cannabis business, which implies that if the market grows (via greater legalization, product diversity, medical innovation, and so on), they’ll both experience substantial profits.
Even with this resemblance, though, there are significant differences.
Because marijuana companies operating in Canada are technically in full compliance with the law, whereas marijuana companies operating in the United States are not (they are in violation of federal United States law), Canadian pot stocks see higher gains than U.S. pot stocks when new international markets open.
That’s because, although American marijuana businesses may be able to profit in such markets in the future, they can’t legally transport marijuana over state borders, much alone send it to foreign territory, at the present.
Marijuana businesses in the United States are likewise unable to deposit their funds at large foreign banks (due to that money being associated with illicit activities and, therefore, technically vulnerable to being seized by the U.S. government). This limitation applies to any money held on U.S. land or in banks with U.S. operations, which are the biggest.
Furthermore, marijuana businesses based in the United States would have difficulties transferring money out of the nation to purchase assets and other global footholds. This essentially excludes marijuana businesses headquartered in the United States from international markets (for now).
However, if Congress passes the Secure and Fair Enforcement Banking Act (SAFE Banking Act), this problem may be resolved.
While there is a quasi-commonality between U.S. and Canadian marijuana companies, one thing they do have in common is potential.
With so many untapped markets, cannabis businesses headquartered in Canada and the United States are certain to see rapid growth as the legal marijuana industry expands domestically and internationally.
So they both have a lot of potential and are growing because of market development.
Differences Between U.S. Pot Stocks & Canadian Pot Stocks
The most striking distinctions between marijuana equities in the United States and marijuana stocks in Canada may be seen in how they respond to market developments.
In general, marijuana stocks in the United States are unaffected by federal marijuana legalization news, while marijuana stocks in Canada are. Yes, I realize it’s a bit strange, but stay with me.
The reason for this is simple: Canadian marijuana businesses have reached the limit of their commercial potential in Canada, at least for the time being.
Remember how valuable Canadian marijuana stocks were when the sector first became legal in the nation. They were regarded as being at the vanguard of a global wave of marijuana legalization that was sure to spread (eventually).
Since a result, marijuana businesses headquartered in Canada are in the most desperate need of worldwide development, as their stock values are just too high in proportion to Canadian pot sales to sustain further growth. Even if the Canadian marijuana industry were completely established, the top Canadian marijuana companies would likely outperform the market.
Canadian marijuana stocks were valued based on their ability to grow in tandem with the global marijuana industry. Of course, the sluggish pace of legalization across the globe is impeding that victory, but many investors are still banking on it.
Meanwhile, marijuana stocks in the United States, such as Curaleaf Holdings Inc (CNSX:CURA, OTCMKTS:CURLF), are basically free to expand in any state that has legalized the drug.
Although there are certain complexities, U.S. businesses such as Curaleaf Holdings Inc have access to numerous markets that Canadian companies do not.
I might add that those markets are much more valuable than Canada’s. California is wealthier and more populated than the whole country of Canada. That implies marijuana businesses based in the state have a better chance of making more money right now than those based in Canada.
While federal legalization in the United States would definitely help U.S. marijuana stocks, it is Canadian pot companies that need that route to be created in order to get access to more consumers and increase sales.
Pot stocks in the United States, on the other hand, may continue to benefit from the country’s already sizable legal market, while each new state-level legalization presents a fresh potential for development.
That isn’t to suggest that Curaleaf stock and others will gain much from federal marijuana legalization in the United States. It simply implies they are less worried about legalization spreading, while Canadian marijuana companies basically need additional markets to live up to their high valuations.
These are the major differences between marijuana stocks in the United States and marijuana stocks in Canada.
Stockcharts.com provided the chart.
While there’s no need to choose just one country’s marijuana stocks, it’s useful to know what drives growth in both US and Canadian marijuana companies.
However, I believe that U.S. marijuana stocks provide a superior deal right now for investors seeking for less volatility and more upside potential.
On the other hand, after the introduction of a federal marijuana legalization law in the United States, several Canadian marijuana stocks are now down. This is what makes Canadian marijuana stocks so appealing.
That’s because, although they may be overpriced in the Canadian context, they aren’t overvalued everywhere else. As nations like Mexico and EU members legalize cannabis, I am optimistic that many Canadian marijuana companies will increase again in the near future.
As global marijuana legalization lags, Canadian marijuana stocks are increasingly susceptible to losses. Due to the vast size of the US market and the growing number of states legalizing marijuana, U.S. cannabis stocks still have plenty of room to take off.
The market for cannabis stocks is growing, and you can take advantage of it by investing in stocks that are related to this product.. Read more about how to grow your stock portfolio and let us know what you think.
Frequently Asked Questions
What is an ideal portfolio?
An ideal portfolio is one that includes a variety of work, and shows the skills and abilities of the applicant.
What should I have in my portfolio?
A portfolio is a set of samples that you have made. The samples should be in the form of art, music, or design.
How do you choose an investment portfolio?
I am not a financial advisor.
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