The marijuana industry has come a very long way in a short amount of time. Back in the mid-1990s, just a quarter of respondents in Gallup’s marijuana survey wanted to see the drug legalized nationally. Further, there were no countries globally that were officially giving the green light to cannabis.
But as of October 2018, two out of every three Americans now favor legalization, per Gallup, with Canada becoming the first industrialized country in the world to OK adult-use pot. In just a little over two decades, the weed industry has blossomed, and perceptions have been completely changed. What was once considered a taboo industry is now a legitimate one — at least in Canada.
With our neighbor to the north rolling out the red carpet for cannabis, a handful of pot stocks have emerged as potential winners in the eyes of Wall Street and investors. None more so than Canopy Growth (NYSE:CGC), which is currently the world’s largest marijuana stock at a valuation of nearly $17 billion…
How did Canopy Growth become the largest pot stock in the world?
How does a marijuana company garner a market cap that’s higher than that of American Airlines Group, Best Buy, and Chipotle Mexican Grill? First, it begins with the company’s production potential. Although Canopy Growth tends to be pretty tight-lipped with its peak production potential, it has noted its intent to have 5.6 million square feet of licensed capacity. If the company were to generate around 100,000 kilograms per 1 million square feet, between 500,000 kilograms and 550,000 kilograms in peak annual production is possible. This would slot Canopy in as the second-largest grower behind Aurora Cannabis.
Second, it ties into Canopy’s superior branding and sales channels. The company has what’s likely the most recognizable pot brand in Canada (Tweed), and it has multiple avenues with which to reach consumers — i.e., physical locations and online sales.
Third, it was one of the first marijuana stocks to uplist from the over-the-counter (OTC) exchange to a reputable U.S. exchange. In fact, it was the first to list on the New York Stock Exchange. Uplisting provides added visibility and improved liquidity, and it helps to further validate the marijuana business model. Just as important, it allows Wall Street firms that might otherwise be barred from investing in OTC stocks to consider coverage and/or investment in Canopy Growth.
Fourth and finally, don’t overlook Constellation Brands‘ (NYSE:STZ) $4 billion equity investment in Canopy Growth, which closed in November. The maker of Corona and Modelo beer now holds…
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