This cannabis investing special report will examine the current state of the cannabis industry and seek to address the potential and risks of the industry after recreational legalization in Canada
SmallCapPower | October 17, 2018: In Canada, rumours of recreational cannabis legalization started circulating in 2017 and immediately caught the interest of investors, and for good reason. Back in January, Statistics Canada estimated that Canadians spent $5.7 Billion on cannabis products in 2017, 90% of which was illegally produced and sold. Consequently, the legalization of recreational cannabis offers a ‘once in a lifetime’ opportunity through access to a multi-billion-dollar market. Over the past year, HMMJ (the TSX-listed cannabis Exchange Traded Fund) has experienced extreme price fluctuations that underlines investor uncertainty surrounding the sector. From October 1, 2017 to January 9, 2018, HMMJ increased 135% peaking at $24.33. Then a market correction occurred in January causing HMMJ to drop by 33% to $16.45 by February 2, 2018. Following the correction, Canadian cannabis stocks leveled off, but following the announcement of formal recreational legalization by the Canadian Prime Minister Trudeau on June 20, interest in cannabis investing has reached an apex. Since August 14, HMMJ has climbed 75%, reaching an all-time high of $26.50 on October 16, 2018.
This report will examine the current state of the cannabis industry and seek to address the potential and risks of the industry after recreational legalization. We selected Aphria Inc. (TSX:APH) as a case study to assess current valuations, product diversity, and operations strategy.
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