Congress is Considering a Bill to Decriminalize Cannabis
Could it finally be happening? Investors and cannabis aficionados alike have been awaiting this moment for years. The House of Representative is set to vote on a bill next week that would remove cannabis from the list of federally controlled substances. We already saw some cannabis stock surging higher in anticipation of the vote, but which stocks should you be targeting?
The cannabis industry is fragmented following state legalization over the past decade. You can invest in actual cannabis growers, cannabis product makers, cannabis growing tools and supplies, or even the CBD industry which has been booming. Interestingly enough it was Canadian cannabis stocks that saw the biggest jumps as federal legalization in the US would broaden the market. Here are two stocks that you should be watching as we inch closer to US federal legalization of cannabis.
GrowGeneration Corp
GrowGeneration (NASDAQ:GRWG) is a picks and shovels play, and one that has some serious upside if the domestic cannabis market was to pick up. This company is a specialty retailer in the US that focuses on items and supplies for hydroponics and organic gardening. It already has 63 locations in the US where cannabis is legal, and I can see this number growing exponentially if we ever do see it legalized across the country. In fact, GRWG is already planning 15 to 20 new locations in 2022.
GrowGeneration’s stock has been beaten down this year as shares are down 30% in 2022 and 78% over the past 52-weeks. It is down significantly from its 52-week high price of $57 per share, and could be an excellent buy at these levels considering how steadily the company has grown in both locations and revenues. Keep this name in mind if rumors of legalization in the US continue to get louder.
Tilray (NASDAQ:TLRY)
Out of the major cannabis growing companies, Tilray is still one of my favorites in terms of potential growth and global cannabis exposure. The Canadian company operates around the world in foreign markets such as Europe, Latin America, and Australia. Much of its exposure to European markets is through its medical marijuana segment, a trend that is steadily gaining acceptance and popularity in the continent. Earlier this month, Tilray’s medical marijuana arm was approved to service the island of Malta, and is the first and only seller of medical cannabis products in the country.
Tilray is one of the stocks that has gained the most out of the recent news. It has now turned its performance around in 2022, and is up by 15.8% year to date. Over the past 52-weeks, however, the stock is down by over 61%. Why do I like Tilray? Optionality in its product line, something that international governments already seem to trust from the brand. Tilray not only sells in Europe, but it produces there too with its production campus in Portugal. I don’t love a lot of cannabis growers, but Tilray is one I would watch if the vote passes with a positive result.
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