The cannabis industry in Canada has helped to give marijuana stocks a clear trajectory for the next few years. Although the past six months have not been especially kind to investors, February has started to show a return to bullish sentiment. Canada as a cannabis industry has made a lot of large steps forward since it went legal back in 2018. The industry undoubtedly has its issues, but the country is working with leading cannabis companies to help solve them as we speak. For pot stocks, there are a few factors that could make 2020 an ideal year for investors.
The two main aspects that investors are focusing on is the large marijuana market in Ontario and the growing derivatives market across the country. Both of these have large influences on the cannabis market overall but in very unique ways. Ontario is the largest province in Canada which means that it is a major focus for pot stock investors. Many companies have used their Ontario operations to spread their seeds across the country’s large width.
Alternately, Canada only legalized the production and sale of derivatives such as oils and tinctures, this year. Because of this slow rollout of derivative products, investors are only now seeing sales estimates begin to go up from these alternative cannabis products. Both of these have large impacts on the short and long term of the Canadian cannabis market. Because of their influence, they are worth exploring in greater detail.
Ontario as the Capital of Canadian Cannabis
Ontario is the largest province in all of Canada. Because of this, it has faced the main cannabis market issues head-on. As the focus of the Canadian marijuana industry, Ontario has to set an example for the rest of the nation when it comes to solving the market’s largest troubles. The biggest issue that the industry is facing right now is worries regarding the supply of cannabis. One of the main causes for this is a lack of licenses being given out to those who wish to own retail cannabis stores. Currently, Ontario uses a lottery system to award potential dispensary owners, the license to sell cannabis.
That system meant that only 24 dispensaries were able to open by the time the industry had been around for a year. Given that Ontario is home to more than 40% of Canada’s population, 24 dispensaries seems like it is not nearly enough. But, the province recently announced that it would be using a new system to award licenses to the public. This system uses applications as the backbone for choosing who to give licenses to, rather than randomly selecting from a pile. This could help to curb some of the issues that the Canadian marijuana market is facing, but only time will tell. For now, investors should continue to watch pot stocks based in the Canadian market.
The Derivative Time is Here
When marijuana became recreationally legal in Canada back in 2018, the laws only applied to dried cannabis flower. But, with the rising popularity of derivatives such as edibles, concentrates, infused products and more, the demand from the public was quite clear. Late last year, the nation decided to legalize the production and sale of these products. One of the important factors regarding derivatives is that they often have much higher margins than dried cannabis flower. In addition to this, many leading cannabis companies have begun to invest in the production and research of this alternative form of marijuana.
With Canada now being a leader in this side of the market, investors are searching for pot stocks that deal with derivatives. There is only a handful of cannabis stocks that have derivative-base operations going on in Canada, but they are working hard to take advantage of the new market that exists. For this reason, derivatives should continue to be a game-changer for pot stocks.
The marijuana market in Ontario and the introduction of derivatives nationwide have helped to bring cannabis projections closer to the present. There are still some major challenges that Canada needs to face in order to have its cannabis market to be successful. With changes going into place on a regular basis, Canada, and pot stocks residing there, looks to be the cannabis industry of the future.
