For cannabis stocks, 2021 started out with a euphoric boom, but it won’t be remembered as a great year for the sector… but big opportunities await the patient cannabis investor.

Cannabis names erupted after 2020’s election in the hope that a change of party in the White House and single-party control of Congress would soon drive federal legalization in the U.S.

But the euphoria over cannabis stocks waned as it became plain that Congress was not moving on federal cannabis reform quickly — despite its popularity with voters. 

However, there are plenty of reasons to be optimistic in the new year. Many multistate operators racked up impressive growth over the course of 2021, even while share prices fell. That means there are quality cannabis names out there trading for cheaper than ever before.

This makes many cannabis companies attractive merger-and-acquisition targets, and there will be opportunities for well-capitalized operators to expand into new parts of the country via buying of competitors. 

Furthermore, individual states continue to move toward legalization, or greater legalization. Louisiana’s law allowing the selling of whole flower products to medical users went into effect this week, with a decriminalization law that took effect last August. Montana voted to legalize it in 2020, with sales also starting this week. 

Arkansas joined the club with more liberal cannabis laws this week too. The state now allows out-of-staters with medical passes to buy within its borders and allows telehealth doctors to write prescriptions. Indiana filed bills for its upcoming legislative session that will create a committee to regulate pot once something happens at the federal level. New York state ended cannabis prohibition last year but has yet to implement a program allowing legal sales. While not a state, New York City is a huge market yet to be fully tapped. 

In these and other state markets, overall strong growth is set to continue. The industry is rolling out new products, like cannabis-infused drinks, that will help increase sales and margins. More mature cannabis markets like Colorado and California will likely lag states with more recent legalization enactments. Early states were beneficiaries of “cannabis tourism,” but with more states going legal, we’ll see more folks staying home and buying from their home locales. 

Plus, we’re in an election year, so you can expect a number of states to run cannabis reform ballot initiatives, opening up an even greater percentage of the U.S. population to the industry.

That means 2022 could bring a huge boost to cannabis stocks’ current low valuations. If early 2021 was any guide, the repricing of the sector could be very strong and swift, creating huge profits for investors buying at current levels.

To a bright future,

Ray Blanco
Chief Technology Expert, Technology Profits Daily
AskRay@StPaulResearch.com