Marijuana Stocks Surge in Anticipation of Legalization in 2017

Article by Nelson Smith, Baystreet.ca

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As it becomes more likely marijuana for recreational purposes will be legalized by the federal government sometime in 2017, investors bullish on the sector are placing their bets.

Canopy Growth Corporation (TSX:CGC), which is Canada’s largest marijuana stock with a market cap of more than $600 million, has seen its share price increase by more than 68% since graduating from the TSX Venture Exchange to the Toronto Stock Exchange back in July.

Other pot stocks have done even better. Aurora Cannabis (TSXV:ACB) has seen shares go up some 200% in the last three months and more than 350% in the last year.

It’s easy to see why investors are bullish on the sector. There are millions of Canadians who regularly use marijuana. Some use it medically; most use it recreationally. There’s a huge market there just waiting to be served.

But at the same time, perhaps investors should remain cautious. Canopy Growth isn’t profitable, losing millions in its past three quarters. It has also been a serial issuer of stock, more than doubling the total number of outstanding shares in the last year alone.

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