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Should You Buy TSX Stocks for Cannabis 2.0?

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Big-name Canadian cannabis corporations have made some exciting announcements about new foreign licensing and acquisitions. Popular Toronto Stock Exchange stocks such as Canopy Growth (TSX:WEED)(NYSE:CGC) and Aurora Cannabis (TSX:ACB)(NYSE:ACB) are among those with huge announcements the past couple weeks.

On October 17, a new line of cannabis products became legal in Canada, marking the arrival of Cannabis 2.0. Cannabis 2.0 is the legalization of edibles, cannabis-infused beverages, and cannabis concentrates. As a result, marijuana stocks were up in the past week.

Here’s what you need to know about the cannabis industry.

Canopy Growth

Canopy Growth has expanded its production of medical cannabis treatments in the United Kingdom and Luxembourg. Spectrum Therapeutics, a U.K. subsidiary, has made progress in reducing delivery time to augment the company’s competitive advantage.

Delivery time is a top priority for e-commerce customers. People and businesses who shop online prefer quick delivery times and are willing to pay for the convenience. Thus, streamlining supply chain logistics is critical for remaining competitive in today’s business landscape.

Moreover, in Luxembourg, Canopy Growth has secured exclusive opportunities to supply medical cannabis from its licensed facilities in Denmark until December 2021. In 2018, Luxembourg decriminalized medical marijuana with severe medical conditions, which may require nontraditional treatment methods to manage troublesome symptoms.

Last Tuesday, Canopy Growth opened at $25.40 per share and has since risen by 5%. Today, the stock is selling for $26.63 at the time of writing. The boost was minor after the stock lost over 50% of its value this past year in a downward correction.

Canopy Growth was drastically overvalued after Cannabis 1.0. It may be reaching a buying opportunity now that it has lost so much of its gains. The downside is that many other cannabis stocks are still far from the value of Canopy Growth.

Using Aurora Cannabis as a benchmark, Canopy Growth is likely still too expensive. At this time, investors should wait. 

Aurora Cannabis

Aurora Cannabis will begin selling vapes, concentrates, and edibles in December. The edibles should be a huge seller in the Canadian market. Aurora will be selling gummies, chocolates, baked goods, and mints.

To ensure the highest-quality products, Aurora has partnered with JACEK Chocolate Couture, WG Pro-Manufacturing, and Touché Bakery. Edibles have higher margins than many other cannabis products. The introduction of these items into Aurora’s inventory should boost what is already stellar financial performance from this medical marijuana company.

Aurora Cannabis has not gained in value since October 17. Today, the stock sells for $4.66 on the TSX. One month ago, it sold for almost $7. Despite this decline in price, investors should not shy away from purchasing some of this stock.

Foolish takeaway

Even though Canopy Growth is more than likely too expensive to purchase, Aurora Cannabis stock is still an excellent opportunity to profit from Cannabis 2.0. Now that edibles and concentrates are officially legal in Canada, cannabis investors have even more ways to benefit from this newly legal industry.

Canopy Growth is still a great stock to keep an eye on. Any enterprise partnering with Seth Rogen to deliver quality pot is a great investment opportunity.

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 Debra Ray has no position in any of the stocks mentioned.

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