Cannabis Bull Market in 2020?
Analyst Predicts Cannabis Bull Market, US Legalization – LPC
James West, Editor and Publisher of the Midas Letter in the US, predicts a cannabis bull market in 2020. He also predicts that the US will legalize cannabis federally in 2020 or 2021.
“2020 is where the next leg up is going make the 2019 sell-off look like a mere paper cut,” West writes. (Please see link to his analysis below.) He said next year is “the year that (US) federal de-prohibition of cannabis becomes an election issue for both parties. This will make investors suddenly revalue the whole sector again… No matter what, the US will legalize cannabis federally if not by the end of 2020, then most definitely the following year.”
Many predicted that US cannabis legalization would happen in 2019. It didn’t, although there were steps in that direction. The US legalized hemp in 2018 and the SAFE Banking Act was passed in September. Although cannabis legalization is almost inevitable in the US, the election will likely determine whether the US public wants it sooner or later.
A cannabis bull market would certainly happen if the US shows any serious signs of legalization. But other aspects of West’s analysis of the situation seems to be off, especially in relation to Canada.
West’s Five Points – LPC
West said the current market situation happened because of five points:
- Stocks fell in 2019 because they started trading on financial performance instead of speculation
- Cheap, outdoor harvests – and lots of it – drove prices down
- The market saw large, panic sell-offs
- Low revenue reports recently drove sell-offs further
- Black market cannabis still accounts for 80 per cent of the Canadian market
There is no mention of what is likely the root cause in Canada: retail cannabis issues. Ontario in particular has been called out for having only 24 legal cannabis stores for a province of over 14 million people. This seems to be a blind spot for US-based analysts and journalists. In November, US news agencies related a bump in stocks to a congressional committee voting to decriminalize cannabis. The more likely reason was that Ontario Premier Doug Ford announced that same morning he was considering opening up the Ontario retail market more. Many LPs out-and-out said Ford’s restrictive retail cannabis policies were part of the reason for disappointing cannabis sales. If the legal retail market does open up in Ontario, that would be enough to trigger another cannabis bull market.
West also does not mention cannabis edibles and in particular cannabis vaping, which will hit the Canadian market soon. These will certainly have an impact for licensed producers in 2020.
So, a cannabis bull market on both sides of the border is a good possibility. However, the reasons for it may be different than what West predicts.
This editorial content from the LPC News Team provides analysis, insight, and perspective on current news articles. To read the source article this commentary is based upon, please click on the link below.
