Update on cannabis stocks: Canopy Growth Corp and Aurora Cannabis

5th September 2019 | Eoin Treacy

Cannabis shares have been selling off of late. The volatility they are prone to is a reflection of the fact the market is still in its infancy. There has been a great deal of enthusiasm in promoting the sector and subsequently some questioning of whether the targets are realisable.

The big prize for the cannabis sector is federal legalisation in the US. There has been speculation circling for some time that President Donald Trump will permit federal legislation as a tool to help him win re-election. Whatever the catalyst, that would be a transformative event for the sector. In the meantime, cannabis remains a truly impressive growth business.

Canopy Growth Corp missed it earnings number at the last call and the company fired its CEO in the summer. There has also been some talk of antitrust because the company is building such a large position in the US market ahead of the expected federal rule change. Aurora Cannabis beat analyst expectations with its earnings but that did not spare the share from a pullback.

In effect what we have by buying cannabis stocks is an option on the substantial growth market that could open up instantly if the US legalises or gradually as the rest of the world changes its attitude towards cannabis.

The one important to bear in mind is that just about all cannabis investment has had a setback. It is too early to state categorically the low is in but I remain a bull of the sector and believe patience will be rewarded.

All the best,


Eoin Treacy
Investment Director, Frontier Tech Investor

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