Should You Buy Marijuana Stocks During The Coronavirus Pandemic?

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The legalization of cannabis in some areas of North America has created an opportunity for you as an investor to take part in this emerging sector. However, with the adverse effects of COVID-19 hurting the economy, it can make it more challenging to analyze the future. The potential for growth is bright as it's likely more states will legalize cannabis in the future. However, some hurdles still need to be crossed before a majority of states allow marijuana to be legal for medicinal or recreational use. 

The Impact Of COVID-19 On The Stock Market 

2018 and the beginning of 2019 was an excellent period for many of the cannabis stocks as prices etched higher. However, market caps for companies in this sector fell sharply into 2020. The strong awareness surrounding the COVID-19 pandemic in March 2020 didn't help the situation. Like most other public companies, the share prices for marijuana stocks fell even lower. Yet, unlike the tech sector, cannabis companies are still seeing the price of their shares drift sideways near their lows. While this may be frustrating for the time being, it isn't surprising as analysts were predicting challenges for the sector shortly. Still, some marijuana stocks are looking good as a long-term hold. 

Are Marijuana Stocks A Good Investment? 

As people were encouraged to stay inside due to the pandemic, many of them decided it would be easier and more mellow to stock up on prescriptions and recreational products, which helped create a surge in the demand for cannabis. The United States handed out $2 trillion in stimulus, which fueled an explosion in marijuana sales on April 15, 2020. It marked one of the biggest days for sales of legal cannabis in history. Since then, the shutdown has slowed down traffic to stores. Having a healthy cash position can be an advantage during this period and provide the cash cushion needed to make up for lower demand. Cronos Group and Canopy Growth are two companies in the cannabis industry that meet these criteria. 

What Are Some Marijuana Stocks To Invest In? 

If you're wondering if it's still a good idea to consider investing in cannabis stocks, it can help to examine some of the fundamentals. Cronos Group and Canopy Growth Corp are two companies in the sector showing a positive outlook. 

1. Cronos Group - CRON

In 2019, Cronos Group received a $1.8 billion investment from the tobacco giant Altria. Signing this deal helped ensure that CRON would receive both marketing experience and the capital required to move the company into one of the more influential positions in the cannabis sector. 

2. Canopy Growth Corp - CGC: 

In December 2019, David Klein became the new CEO for Canopy Growth Corp, which has led to several changes for the company. In May, a "reset" was announced, which would dial down the company's focus on selling only the most profitable products in markets, such as the United States, Canada and Germany. This transition is expected to help increase revenues. Last year, products such as vaping devices, beverages and edibles became legal for the company, which should start to help improve the bottom line. According to Money Morning, “This investment into Canopy Growth Corp. is projected to be worth $66.3 billion by 2025. Constellation is also looking to develop its own cannabis-infused products and could potentially be a major vendor.” The long term projections of this company may be a great hold for profits in the coming years. 

Cannabis Conclusion

Investing in cannabis stocks that have a cash cushion and the support to market their products positively may help increase the share price in the long term. These top cannabis stocks may be two of them you should put in your portfolio.

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