Legal Marijuana Could Be a Major Tailwind for This Iconic Canadian Company

Here’s why Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR) may be poised to benefit from the legalization of marijuana.

| More on:

With cannabis legalization on the horizon, many investors have loaded up on speculative cannabis producers such as Canopy Growth Corp. (TSX:WEED) with the hopes of realizing next-level returns over the long run. While the legalization of cannabis opens many types of new opportunities to investors, publicly traded cannabis producers are way too risky for the average Canadian investor to own.

Fortunately, there are indirect ways to capitalize on cannabis legalization without elevating your risk profile to the next level.

Many pundits believe that legalized cannabis will cause a surge in demand in the first few years. As more cannabis users light up, one Canadian stock will be positively affected without the risk of a hangover if cannabis stocks decide to take a plunge in response to some unexpected political headline.

Think about it. Smoking cannabis causes a side-effect known as the “munchies,” which causes people to start going on a snacking rampage, ripping through multiple bags of chips and ingesting an entire freezer’s worth of microwavable foods like pizza pops or sliders.

If there happens to be a Burger King (owned by Restaurant Brands International Inc. (TSX:QSR)(NYSE:QSR)) within the vicinity, then many stoned folks are likely to head on over to these restaurants, like Harold and Kumar and their voyage to White Castle for sliders.

In a study conducted by Green Market Report, ~18% of cannabis users list Burger King as their go-to place when they’re hit with the munchies. That’s considerably lower than 43.4% of cannabis users that prefer McDonald’s Corporation (NYSE:MCD); however, I believe Burger King has a gigantic opportunity to make up ground through its innovative new menu items, like Mac N’ Cheetos, and clever marketing campaigns that may be aimed at pot smokers. McDonald’s appears to be ahead in the game with stoner-targeted billboard ads promoting its breakfast wraps, which read “Usually, when you roll something this good, it’s illegal!”

“We believe location and frequency are a large part of why McDonald’s took the top spot. They are simply a larger chain with more stores,” says Cynthia Salarizadeh, co-founder of Green Market Report. That’s a huge opportunity for Burger King, which has one of the more aggressive marketing campaigns out there.

The general public is steering towards healthier eating, which is a trend that I believe is sticking around for the long haul; however, as the world becomes more open to marijuana use, fast-food giants stand to be huge winners, especially once delivery systems are implemented.

Bottom line

Restaurant Brands International is a fantastic company with an incredible management team and a very promising growth profile.

Cannabis legalization is just another potential tailwind for Burger King, Tim Hortons, or Popeyes, which may send same-store sales flying gradually over time. It’s an interesting development, and I’m curious as to whether or not fast-food companies will start actively targeting pot smokers with advertisements once weed is legal.

Stay smart. Stay hungry. Stay Foolish.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette owns shares of Restaurant Brands International Inc. The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC. 

More on Investing

Canadian Dollars
Stock Market

Where to Invest $5,000 in April 2024

Do you have some extra cash to spare? Here are five companies to invest $5,000 in next month.

Read more »

Plane on runway, aircraft
Stocks for Beginners

Up 53% From its 52-Week Low, Is Cargojet Stock Still a Buy?

Cargojet (TSX:CJT) stock is up a whopping 53%, nearing closer to 52-week highs from 52-week lows, so what's next for…

Read more »

Question marks in a pile
Bank Stocks

Should You Buy Canadian Western Bank for its 4.8% Dividend Yield?

Down 35% from all-time highs, Canadian Western Bank offers a tasty dividend yield of 4.8%. Is the TSX bank stock…

Read more »

Gold bars
Metals and Mining Stocks

Why Alamos Gold Jumped 7% on Wednesday

Alamos (TSX:AGI) stock and Argonaut Gold (TSX:AR) surged after the companies announced a friendly acquisition for $325 million.

Read more »

tsx today
Stock Market

TSX Today: Why Record-Breaking Rally Could Extend on Thursday, March 28

The main TSX index closed above the 22,000 level for the first time yesterday and remains on track to post…

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »