As the cannabis industry continues to evolve, investors are eagerly anticipating a potential resurgence in 2024 for cannabis stocks. The landscape is shifting with changing regulations, increasing acceptance, and a growing demand for cannabis products.
Let’s explore the possibilities of resurgence in the cannabis market. Then we will check which stocks are poised to capitalize on new opportunities.
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Canopy Growth
Canopy Growth (TSX: WEED) is a Canada-based company engaged in the business of, you guessed it, cannabis cultivation, distribution, and retail. The company is mainly focused on the distribution, marketing and production of bulk cannabis, though Canopy does focus on other value-added higher-margin products as well.
Canopy Growth is known for being the first unicorn in the Canadian weed market. Its products and offerings include dried cannabis flowers, beverages, gel capsules, vapes, cannabis accessories, and oils and concentrates. Other offerings include hemp-based CBD products like soft gels, topical creams, nutrition beverages, and oils.
Recently, the company has announced the launch of new products in segments like adult use and medical cannabis line-up. The additions include fresh Tweed soft gels and oils infused with minor cannabinoids, exclusive medical pre-roll products from 7 ACRES, and a larger flower option from Tweed.
The company has engaged in subscription agreements with specific institutional investors for a private placement. Its objective is to provide additional liquidity to make its financials strong. The offering involves 8,158,510 units, each priced at US$4.29, resulting in total gross proceeds of around US$35 million.
Overall, the capital raising environment has been difficult, and investors have been punishing companies that can’t produce consistent profits. Accordingly, Canopy’s stock price has tanked, and there’s little optimism around this name right now.
Aurora Cannabis
Aurora Cannabis (TSX: ACB) is another Canada-based cannabis producer based out of Alberta. Notably, Aurora is more focused on the medical marijuana market, though the company also engages in the production of other higher-value products as well.
Just taking a look at the above stock chart really tells a story. Investors have moved away from the Canadian cannabis market in dramatic fashion, leaving companies like Aurora in the dust.
Recently, the company has announced the launch of three new cannabis-infused beverages, initially accessible to veteran patients. Crafted to excel in taste, potency, and variety, the introduction of these beverages is a response to the preferences of patients seeking alternative forms of cannabis to enhance their well-being.
As of right now, it doesn’t appear these catalysts are having their intended effect on the company’s stock price. As is the case with Canopy, Aurora will need to see something significant change in a hurry, or things are likely to continue to head south.
Bottom line
The Canadian cannabis industry has been in the doldrums for quite some time. Notably, demand hasn’t materialized as expected. Red tape in this space is rampant, and legalized pot is simply much more expensive than the stuff many Canadians used to get as a teenager in a back alley.
Canopy and Aurora invested heavily in growing their size and scale before they knew what the market would ultimately be. This space has entirely imploded. And perhaps there’s some value to be had digging for cigar butts here.
That said, for growth investors looking for sustainable upside, really any other sector is a better option to asses right now. At least, that’s my take.
