These 3 Marijuana Stocks Will Profit From Legal Cannabis In Canada

Canada legalized recreational marijuana on Tuesday with the historic passing of Bill C-45 in the Senate. Marijuana stocks surged following the vote, even beating what was an otherwise down day on the global markets. Canadian Licensed Producers Canopy Growth Corporation (TSX:WEED) (NYSE:CGC) and Aurora Cannabis Inc. (TSX:ACB) (OTCQB:ACBFF) both jumped six percent at their highest peak on Wednesday, with number three Aphria Inc. (TSX:APH) climbing four percent.

Despite minimal gains, the market’s positive response to legalization is seen by many as a positive sign of things to come. It means that cannabis stocks have a lot to gain now that weed is legal in Canada. There is a projected $4 billion boom in store for the Canadian market alone. Moreover, the shift to a legal market puts Canadian companies in a position to outpace and outmaneuver their U.S. counterparts.

These are the top three marijuana stocks poised to profit now that cannabis is legal in Canada:

Canopy Growth Corporation

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As the number one Licensed Producer in Canada, Canopy Growth Corporation is set for significant gains in the coming months. Prepping for this surge in the recreational market includes the 2.4 million square feet of greenhouse space with which Canopy is already working. The company acquired supply agreements with half of the Canadian provinces ahead of legalization, and new dispensaries are scheduled to open in Saskatchewan, Manitoba, and Newfoundland and Labrador to meet demand.

It is not just the square footage that positions Canopy Growth for profits. On Tuesday, a few hours before Bill C-45 passed in Canada, Canopy Growth announced a multi-year agreement in relation to extraction and wellness products Neptune Technologies. The partnership gives Canopy access to cannabis oils and extracts, considered to have some of the highest margins in the cannabis industry —a strategic move that could pay off with recreational marijuana consumers.

"Extract products are key to the future of the global cannabis industry,” Canopy’s President Mark Zekulin clarified in a statement released on Tuesday. “We're taking the right steps to significantly increasing our production capacity to capture this opportunity.”

The multi-year agreement includes a minimum volume commitment, a clause that protects Canopy’s already enormous production capacity. The two companies now operate a combined production platform of over five million square feet, a size that helps to solidify Canopy Growth’s position as a pot stock ready to benefit from Canadian legalization.

Aphria Inc.

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Aphria Inc. is already among the top five Licensed Producers in Canada. BMO Capital Markets recently gave Aphria an ‘Outperform’ rating, stating that the pot stock is “one of the few licensed producers with sufficient product to supply the initial recreational demand.”

The company is poised to profit from Canadian legalization in a big way because they have the advantage of being among one of the first brands to bring cannabis to the recreational cannabis consumer. Though they have a smaller production capacity than Canopy Growth, Aphria is still projected to produce over 225,000 kilograms of marijuana by 2019. More than that, Aphria produces pot at less than $1 per gram, giving them a competitive pricing edge in a new recreational market.

Riding on the tails of legalization, Aphria will also be releasing brand new recreational brands targeted at new consumers. Building brand awareness was tricky in a market that was illegal up until a few days ago, but Aphria’s low production costs could mean a smaller price tag. This strategy can help new customers recognize the new brands, which include Solie, a recreational brand Aphria is launching this summer. With timing like this, Aphria is poised to profit from Canada’s new recreational market.  

MedMen Inc.

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As controversial as they may be MedMen Inc. (CSE:MMEN) (OTCQB:MMNFF) may profit from Canada’s new marijuana law. The company teamed up with The Cronos Group (NASDAQ:CRON) (TSX:CRON) back in March for a joint venture that will bring American cannabis brands into the Canadian legal market. As one of the most successful cannabis retail chains in the United States, MedMen now combines their retail expertise with Cronos’ massive 350,000 square feet of production space. This combination could make MedMen highly profitable now that recreational marijuana is a legal reality.

MedMen may not have the production numbers that Aphria or Canopy are posting up, but this joint venture is congruent with their real estate plans. The company is focused on finding real estate that services their customers while respecting the laws that prohibit retail cannabis sales near schools, churches, and public parks. By teaming up with Cronos Group, MedMen is giving themselves first dibs on ideal retail spaces throughout the Canadian provinces.

MedMen is already among the first American cannabis companies to trade publicly on the Canadian Securities Exchange (CSE), and they were recently added to American OTC Venture Market on last Monday. The move was well timed with Canada’s historic legalization vote, putting this California pot stock in position to benefit from a broad reach across an almost wholly legal North American continent.

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