Weed stocks have not had the best time in recent years. Popular cannabis stocks boomed leading up to recreational cannabis legalization but declined soon after. 2021 paints a different picture for the legal cannabis industry.
The election of Joe Biden in the U.S. and improving chances of federal legalization across the border is causing more capital to flow into the marijuana industry. The current appreciation in Canadian weed stocks has strong cash flow backing it. Cannabis companies managed to raise approximately US$2.6 billion only in the first half of 2020 as funding was tight amid the pandemic.
The United Nations Commission on Narcotic Drugs decided to remove cannabis from the strictest schedule under the Single Convention on Narcotics in December 2020, which means that the chances of federal legalization are stronger than ever.
Naturally, a return to better conditions means a bullish trend. Cannabis investors who threw in the towel previously might be busy picking their favorites among established giants like Canopy Growth and Aphria.
However, there is an underrated weed stock in Canada that could provide investors with more explosive returns than the battered cannabis industry giants. It is even possible that the valuation of this weed stock could double this year.
Leading CBD wellness producer
Charlotte’s Web (TSX:CWEB) is a Boulder, Colorado-based manufacturer and distributor for hemp-based cannabidiol (CBD) wellness products. The vertically integrated company does not produce any medicinal or recreational marijuana, but it is the leading global CBD wellness product manufacturer.
The company’s focus on this niche within the cannabis industry gives it a significant advantage over its peers because CBD is already largely legal throughout the U.S. The company recently launched its new THC-Free 25mg CBD Oil Tinctures. It is possible that its latest CBD wellness product could spur significant growth for the company.
Charlotte’s Web’s primary target audience includes essential workers like healthcare providers, civil service employees, police officers, firefighters, and many others. Most of these people are in high-stress work environments and become extremely exhausted due to their jobs. Charlotte’s Web’s THC-Free wellness product offers these workers a trouble-free stress reliever.
The company also signed an exclusive deal for distribution agreement with InterCure Ltd. This company owns Canndoc, one of the most significant medical cannabis producers in Israel. This strategic partnership could immensely benefit Charlotte’s Web because Canndoc is a leading entity in pharmaceutical-grade cannabis.
Canndoc also holds international cultivation and distribution agreements in the European Union. It means that Charlotte’s Web may begin selling its product through this partnership in Israel and possibly in certain EU countries in the future.
Charlotte’s Web is trading for $5.69 per share at writing and is down almost 80% from its all-time high in August 2019.
The stock could be an excellent investment to consider for your portfolio if you seek rapid wealth growth in the short-term and long-term sustainable growth. You can initiate a position in the stock today and capitalize on the gains when the breakout comes.
Speaking of stocks for excellent long-term growth …
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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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Charlotte's Web Holdings.