Cannabis stocks continue to be some of the worst-performing stocks in 2023, and October looks to be no exception. While that can be disheartening, it can potentially be an opportunity as well for long-term investors.
That’s why today we’re going to see what’s really going on with cannabis stocks this month. In particular, we’ll take a look at what (if any) major moves have been happening in Canada and the United States, the outlook, and company performance in the industry.
Canada and the U.S. make moves
While cannabis has been legal in Canada for quite some time, there continue to be updates by federal and provincial governments worth noting. For instance, the federal government most recently announced in January of this year an increase in the maximum amount of cannabis that adults can possess from 30 grams to 50 grams.
British Columbia, Ontario, and Quebec have all made announcements in the last few months. B.C. announced it would allow retailers to sell samples; Ontario will allow retailers in shopping malls; and Quebec will allow cannabis-infused products. This just shows that the market continues to expand.
In the United States, news is a little less often. The federal government hasn’t made any announcements since October last year, and that is just a statement on marijuana reform. Since then, there have been a few moves by states, such as the use of recreational cannabis in New Jersey and Connecticut for next year. Further, legalization in Delaware is moving on to Senate approval.
Company performance
If we’re looking at cannabis stocks, the two we’re going to focus on are Canopy Growth (TSX:WEED) and Tilray Brands (TSX:TLRY). These are the largest products in the world, with the best chance of enormous global expansion — at least, eventually.
As of now, the two are struggling. Canopy Growth has taken steps to improve profitability but continues to post a net loss of $182 million as of its most recent earnings report. While this is less than the previous quarter, investors are getting impatient.
Tilray stock, meanwhile, has been seeing more signs of recovery. Most recently, it actually posted a profit of $12 million — the first time in two years! Even so, both are a shadow in the share prices of their former selves.
Outlook
Now, for the future. I highly doubt there will be any more major share price moves among cannabis stocks in October 2023. Even if the Biden administration comes out with another announcement, any gains are likely to be short-lived. So, until full legalization comes on board in the U.S., it’s quite the waiting game.
But that waiting could prove worth it. The industry faces many challenges, such as overproduction, high taxes, and regulations. But it’s also growing rapidly, with signs of recovery underway. With more states legalizing the product for recreational use, we could see the states enter federal legalization sooner than we realize.
Meanwhile, Canadian cannabis stocks would certainly benefit from U.S. legalization as a major supplier — Canopy Growth and Tilray stock in particular. So, if you have cannabis stocks and aren’t looking to sell for a loss, hold on. They could fly high in the next decade once again.
