January 1st, 2018 – Bill Cox
US and Canadian listed cannabis stocks have been on fire since early 4th quarter 2017. One catalyst after another has led to stock price appreciation not seen since 2014 when Colorado implemented the world’s first recreational cannabis laws. Today, January 1st, 2018 marks the first day of California’s recreational cannabis sales which has been a major driver of the steep incline in cannabis company’s stock prices. This was made possible by Jeff Sessions formally allowing the Cole Memo to remain in tact, essentially allowing State’s rights regarding cannabis to continue for now. This has given the green light to the industry and thus, stocks are reacting positively.
Interestingly, it has been Canada leading the charge into the historic Californian implementation catalyst as the Canadian cannabis index is up a whopping 250% in the last few months while the US index is up about 100% over the same time frame (charts below). Of course Canada’s regulatory framework is superior to that of the US where Federal Law is still a hindrance, yet Canadian market caps for numerous companies have swelled well into the billions while most US companies have barely topped the 100 million dollar mark.
Although the charts appear similar, the percentage gains are not..
Kush Bottles [ticker: KSHB] boasts the largest revenues of all US based cannabis companies, but has yet to top a quarter billion dollar market cap., for example. Many US companies are only recently showing signs of a bump in the road within their respective stock prices, and maintain tiny price tags (most being penny stocks), yet will be directly impacted by the 6th largest economy in the world going recreational starting this year. This could mean plenty of upside is left within the US cannabis space.
With many Canadian companies already soaring well into the billion dollar range, it appears their upside is limited and could even find weakness in the coming weeks with numerous catalysts being spent over the last few months and none visible for the near term. Meanwhile, there has not been such an appreciation within US cannabis industry to warrant a “sell the news” scenario. In fact, charts look similar to the weeks leading up to Colorado’s implementation of their recreational law, yet this time there are likely many more participating investors which could lead to an even more spectacular cannabis stock rally than the great “Green Rush” of 2014.