The Cannabis industry is not only sailing through the COVID-19 storm relatively well, but is also positioning itself to unleash its immense growth potential. Cannabis sales are ramping up in spite of the pandemic and in some cases, because of it. Though the market was beaten up over the last year, operators are focusing on picking up activity as they make it out of the storm, and it seems that a golden opportunity for cannabis has emerged as a side-effect of COVID-19.
Canopy Growth (NYSE:CGC) is the biggest Canadian cannabis producer with the largest market cap of any pure-play pot stock on the market right now. Canopy Growth Corp’s (NYSE: CGC) recent developments such as management changes and “right-sizing” of operations, along with its strong cash, robust balance sheet and market share position all allowed the producer to scale its business in both Canada and abroad faster than its peers. Its strengths make it a good contender for becoming a long-term leader in the cannabis sector despite the fact that Canadian market has evolved somewhat slower than anticipated.
The U.S.-based cannabis operator, Green Thumb Industries (OTC:GTBIF) generated even more revenue than its Canadian peer in its latest quarter with its revenue growth and total revenue both being greater. It might not have such a big equity partner, but it doesn’t appear to be needing one either. GTI’s revenue surged 267.6% year over year and 35.4% quarter over quarter as they reached $102.6 million in the first quarter. GTI might not be profitable just yet, but it’s on the right track as the company’s net loss in the first quarter that amounted to $4.2 million shows a significant improvement when compared to the previous quarter, Q4 of FY 2019. Along with a positive cash flow from operations, the company also generated a positive EBITDA which went up from $7.8 million in the last quarter of 2019 to $20.3 million in the first fiscal quarter of the current year. With its revenue forecasted to reach $435 million this year along with strong growth prospects, this is one marijuana stock that can be even seen as a bargain on an investor’s radar.
Active Midcaps are not far behind!
Despite pulling its full year guidance and issuing a warning on its second quarter revenue, KushCo Holdings, Inc. (OTC:KSHB) secured somewhat of a cushion when it made a massive strategic partnership with Xtraction Services Holdings Corp. (OTC:XSHLF) which recently affirmed its ability to capitalize as on May 12, the company announced that it joined forces with the largest private cannabis operators in the US, PharmaCann Inc. as it secured a lease agreement for up to US $3.4 million.
Moreover, Hemp Inc (OTC:HEMP) just achieved a major milestone as it surpassed $1 million in sales from its premium, high quality hemp flower. After a very frustrating two months of delays due to the pandemic, the company is now going “full speed ahead”.
COVID-19’s impact on the cannabis industry shows that national legalization could be near. Cannabis is no longer emerging, it’s essential. With people being scared for their health, their jobs, their lives, they are more likely to turn to medical cannabis to deal with chronic pain, insomnia, anxiety and depression, which have all contributed to increased demand during the pandemic, according to Natural Health Services and author of Medical Cannabis in Canada. And there are plenty of studies underway trying to prove that cannabis could provide resistance or decrease severity of SARS-CoV-2.
Moreover, as governments now have to look for ways to pull the economy from a recession and possibly even depression with so much unemployment, legalizing cannabis could be an indispensable tool in solving that problem.
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