All eyes are on Canada as the country is hopefully set to legalize recreational marijuana in all territories on this summer, which has some investors hoping for another run on pot stock prices. For Americans, the number of recreational states will jump to eleven when Massachusetts officially starts selling weed on July 1. Whether or not cannabis stocks hit new all-time high remains to be seen, however, as volatility has kept the market down throughout 2018.
And while many worry about weed shortages and regulations slowing sales, there is no denying the fact that the recreational market continues to expand. Here are three marijuana stocks in the recreational space that investors should consider for their portfolio:
CannTrust Holdings Inc.
Last week, CannTrust Holdings Inc. (TSX:TRST) (CNTTF) announced their official launch into the recreational market with three new brands. CannTrust is already providing medical marijuana throughout Canada, but their three new brands will be marketed specifically to the recreational user.
“Based on our in-depth analysis of the targeted recreational market we carefully curated a selection of strains for each of our brands and are confident that we have selected the right product mix to appeal to a broad range of both retailers and consumers" CannTrust’s President Brad Rogers clarified in a statement on Friday.
The company is targeting the experienced pot smoker who looks for a quality product without “all the bells and whistles.” Two of the new products lines —Synr.g and Exscape —will only come in flower or pre-rolled joints, while their more designer line Liiv comes in oil and capsule form as well. These new brands reflect an in-depth knowledge of the recreational niche market.
CannTrust’s had record-breaking first-quarter earnings, posting revenue of $7.8 million with 650,000 grams of weed sold so far in 2018. Contributing to their success was a 186 percent increase in active medical marijuana patients. CannTrust is now serving over 40,000 marijuana users. When recreational marijuana is legalized this summer, that number is expected to increase exponentially.
Liberty Health Sciences
Liberty Health Sciences (CSE:LHS) (OTC:LHSIF) opened its second Cannabis Education Center (CEC) in Florida earlier this month. The new CEC is located within a private hospital in Tampa and provides patients with high-quality medical-grade cannabis. The company also brings big cannabis brands to American medicinal and recreational markets, including Aphria Inc. (TSE:APH) and Mary’s Medicinals. Liberty Health just signed an exclusive agreement with Mary’s Medicinals to bring their high-quality pot and pot-related paraphernalia to Massachusetts.
“We are very excited to extend our partnership with Mary's into Massachusetts, providing consumers with access to award-winning cannabis products featuring safe and effective alternative delivery methods,” George Scorsis, CEO of Liberty, said in a statement Friday.
Liberty Health is already licensed to sell Mary’s products to medicinal users, and recreational users will be able to purchase and consume products when the new law goes into effect this July.
An American cannabis stock expanding from their traditional business is Scotts Miracle-Gro (NYSE:SMG). They are a household brand using subsidiaries to focus on recreational users who prefer to consume home-grown marijuana. So far it has been a successful strategy for a company already well-established in the home gardening sector.
The Hawthorne Gardening Company is one of Scotts’ subsidiaries that offers a suite of hydroponics and light systems. It contributed to a third of Scotts’ sales last year, inspiring the pot stock to invest in more ancillary cannabis companies, like Sunlight Supply. Scotts paid $450 million to acquire the gardening supply distributor last month, absorbing it into their Hawthorne Gardening brand.
The Motley Fool dubbed Scotts Miracle-Gro as one pot stock that could be a backdoor into the industry for investors. Navigating the cannabis market through ancillary and vertically integrated gardening brands could push profits in a positive direction for this pot stock.
*Photo Credit: Tanjila Ahmed