Amazon’s announcement that it plans to become a major player in the marijuana industry has investors talking about the stock. Amazon is always thinking about new ways to expand its reach, and the cannabis industry is a natural fit. http://thegrasshoper.blogspot.com/2018/09/2-stocks-to-play-amazon-s-new.html
On Thursday, Amazon announced plans to buy a stake in the Canadian cannabis firm, Canopy Growth. This move comes as the U.S. Drug Enforcement Administration (DEA) has decided to ease restrictions on the plant and more cannabis products are hitting the market. If Amazon has its way, the company will have an extensive supply chain of cannabis-based products, which could in turn help the company gain some pricing power. Amazon is already working on a delivery service that will use drones, and it is a logical next step for the company to begin delivering cannabis products. With the help of Canopy Growth, the company could get a big leg up on its competition.The American cannabis industry has a powerful new ally: one of the largest and most influential technology companies. The tech giant not only supports the legalization of cannabis at the federal level, but will also invest millions in lobbying Congress to get it through. Today, I discuss the impact Amazon’s announcement could have on the cannabis industry and how you could potentially benefit from two cannabis stocks that just announced impressive revenue growth for the first quarter.
Amazon announces support forlegalization.
Last week, Amazon (NASDAQ: AMZN) created a furor in the cannabis industry by announcing its support for federal cannabis legalization. The company hopes to achieve this goal through Moore’s Law, a cannabis bill currently being considered by Congress that would essentially legalize cannabis on a federal level. Here are some details of the marijuana moment. On Tuesday, Amazon said it would stop testing many of its employees for marijuana and treat it the same way as alcohol. The company is also officially joining the movement to legalize cannabis and will actively lobby Congress to support legislation to end federal prohibition. To achieve this goal, Amazon said it would lobby Congress for legalization. Because we know this issue is bigger than Amazon, our policy team will actively support the Marijuana Opportunity Reinvestment and Relief Act of 2021 (MORE Act), federal legislation that legalizes marijuana at the federal level, lifts criminal records and invests in affected communities. We hope that other employers will join us and that the politicians will act quickly to pass this bill. This is good news for the American cannabis industry. Amazon is one of the most powerful and influential companies in the world and has a long history of achieving its goals. Amazon’s support for legalization raises the possibility of meaningful cannabis reform in the next 12 months. If the More Act passes, I expect cannabis stocks to rise. Meanwhile, the shares of U.S. cannabis producers are going belly-up. Advisor Shares US Cannabis ETF (NASDAQ: MSOS) is down 25% from its 52-week high. The stock has formed a strong support level around $40. Looking ahead, the stock has a good chance to recover from this key level. Advisor Shares US Cannabis ETF (NASDAQ: MSOS) 2-week chart Below are the two key industry leaders that could benefit from the passage of the More Act. These billion-dollar companies are two of the largest in the cannabis industry, and both just released impressive quarterly results that show they are capitalizing on the growing U.S. cannabis industry.
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Ascend Wellness (CSE: AAWH, OTC: AWWH) is a $1.7 billion cannabis industry leader that just went public on the Canadian Securities Exchange. Founded in 2018 and based in New York City, Ascend is one of the largest cannabis companies in the United States. Ascend has an impressive portfolio of cannabis cultivation facilities and dispensaries. These include:
- 17 pharmacies in five U.S. states, including Illinois, Massachusetts, New Jersey, Ohio and Michigan.
- 74,000 square feet of space for medical and commercial cannabis cultivation
With these assets, Ascend is betting on the rapidly growing U.S. cannabis industry. The company’s latest first quarter results show impressive revenue growth, unmatched by any other industry.
- Total revenue of $66.1 million was up 21.8% from the previous quarter and 192.7% from a year ago.
Columbia Care (CSE: CCHW, OTC: CWBHF) is an early pioneer in the rapidly growing cannabis industry in the United States. Columbia, headquartered in New York, NY, is one of the largest cannabis companies in the United States, with a market value of $1.7 billion. Columbia Care has an impressive portfolio of cannabis-related assets. Company:
- is present in 18 US states and the European Union.
- has 76 clinics and 24 cultivation and production facilities.
- just reported third quarter revenue of $54 million, up 64% from the previous quarter and 145% from the prior year.
Columbia Care is also showing impressive revenue growth. First quarter revenues were $93 million, up 220% from the same period last year. Meanwhile, Columbia shares are selling off and are trading 30% below their recent 52-week high. We think Columbia shares will hit a new 52-week high by the end of 2021. Columbia Care 12-month chart (CSE: CCHW, OTC: CWBHF)
The American cannabis industry has just gained an influential new ally after Amazon announced its support for federal cannabis legalization through the More Act. Amazon’s support for the More Act increases the likelihood that the bill will pass in the next 12 months, and if it does, we expect cannabis stocks to get a big boost.
About the author and cannabis stock trading
Michael Wodicka is an equity analyst with over 20 years of trading and investment experience. His research has received attention in some of the industry’s most respected publications. He has been investing and managing investors in the cannabis sector since 2013. Mr. Vodicka offers his experience and advice to Cannabis Stock Trades members. Sign up for Cannabis Stock Trades and receive exclusive analysis from Mr. Water, trade alerts and a sample portfolio.
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