1 Marijuana Stock That Could Double Your Money

The coronavirus pandemic has wreaked havoc across the globe, and while some businesses are slowly returning to normal, most sectors have suffered huge losses.  Surprisingly, the marijuana sector isn’t one of them…

The pandemic increased demand for both medical and recreational cannabis, and marijuana was declared an “essential item” during lockdowns. That boosted revenues for U.S. cannabis companies in particular.

Their Canadian counterparts also saw rising revenue numbers, but Canada is still challenged by a lack of legal stores, which has led to supply issues and increased competition from the black market. The most popular players, Canopy Growth (NASDAQ:CGC) and Aurora Cannabis (NYSE:ACB), had already seen a lot of damage in 2019; this year, both companies are making desperate attempts to recapture the market. Canopy, in particular — while it is struggling — has much brighter prospects than most of its peers. Its revenue is even growing, albeit not rapidly, and not enough to show (yet) on the bottom line.

But management at Canopy is making efforts to reduce costs and achieve profitability. The company has exited operations in South Africa and Lesotho and closed some facilities in Canada, Colombia, and New York in April. This former favorite has a high likelihood of recovery, potentially bringing it back to the forefront of the cannabis market again. Let’s take a look at how that could happen.

Cannabis derivatives are the key to Canopy’s future

In its second quarter, which ended Sept. 30, Canopy’s revenue was up mostly because of demand for its recreational products. Its Canadian adult-use cannabis revenue rose by 15.5%, which helped the total reported revenue jump 77% year over year to 135.3 million Canadian dollars.

The credit for the increase in recreational revenue can be given to the company’s new cannabis derivatives products. Cannabis derivatives (vapes, edibles, concentrates, beverages, and more) were legalized in Canada as part of “Cannabis 2.0” in October 2019. Since then, Canopy has launched a wide range of products to capture this market.

Its cannabis beverages, in particular, have garnered excellent reviews, according to management. Canopy has shipped over 1.2 million cannabis beverages since late March, and management proudly announced in a press release that the company now has a 54% dollar market share with its five ready-to-drink tetrahydrocannabinol (THC) cannabis beverages. These products are offered under the Tweed, Houseplant, and DeepSpace brands.

Its strong financial backing is pushing it toward success

Canopy has a secret weapon in U.S. beverage giant Constellation Brands (NYSE:STZ), which is doing much of the company’s heavy lifting. The businesses entered into a strategic partnership in October 2017, when the maker of Corona and Modelo beer, among other adult beverages, invested CA$245 million in Canopy. Since then, as a sign of faith in Canopy and the cannabis market’s potential, Constellation has been…

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