Which stocks do you think would make the list of some of the hottest stocks in 2019? Artificial intelligence? Shipping stocks? Well, now you can add marijuana stocks to your stock watch list.
Below, we’ll offer tips for making money trading California marijuana stocks, including:
- Keep in mind that it’s a risky proposition.
- Do your research.
- Stay up to date on the news.
- Focus on the catalyst.
As pot has become legal in more states across the country, stocks in marijuana companies have become red-hot items. Check out our investment guide to learn everything you need to know about California marijuana stocks, including which ones to watch.
What Are California Marijuana Stocks?
In short, sales of legal cannabis have exploded in California since pot became legal in January 2018, leading to a boom in the California marijuana industry. That’s why California pot stocks are such hot-ticket items ripe for investment.
Marijuana has been legal for recreational use in California following a voter referendum in November 2016. With legalization, adult-use dispensaries have been allowed to sell pot since Jan. 1, 2018, leading to an explosion in this business.
Across the United States, sales of legal cannabis grew by 34% in 2018 to $10.8 billion. Forecasts suggest marijuana spending across the country will grow by about 38% in 2019 and will likely continue to go up over the foreseeable future.
In California, sales of marijuana are expected to top $5 billion in 2019, as new dispensaries continue to be licensed and begin selling pot. This is big news because California has the largest economy of any state in the country. In fact, California has the fifth-largest economy in the world by gross domestic product (GDP).
This means even though the United States federal government still classifies cannabis as an illegal substance, the California market has plenty of opportunity for growth.
How to Invest in California Marijuana Stocks and Make Money
Here are some of our best tips for investing in California marijuana stocks.
It’s a Risky Proposition
While pot is legal at the state level in California, it is still an illegal substance at the federal level. Legalization is relatively new, meaning regulations are not set in stone, and there’s a lot of uncertainty in the market.
This means investing in California weed stocks is a high-risk, high-reward play. Therefore, only invest capital you can afford to gamble and potentially lose. Remember, there’s no reward without significant risk in this area. We suggest you balance your investment in California weed stocks with more conservative investments elsewhere.
Do Your Research
Because California pot stocks are a relatively new game, so it’s up to you to do your due diligence. When you’re considering investing in a California weed company, review relevant laws as well as company filings. Doing your research in advance will help you to be well-positioned and to achieve success trading pot stocks.
Stay Up to Date on the News
You’ll also need to stay up to date on relevant California marijuana stock news. Missing a key event or piece of information could mean missing the right trade. Google is your friend here, but it’s important to keep up with news sources you trust. We recommend keeping an eye on Bloomberg, CNBC, and Reuters, as well as local California media sources, for relevant California marijuana stock news.
Check out Raging Bull’s Insider to find the latest investment news, tips, and much more.
Focus on the Catalyst
Our hot tip: When tracking California marijuana stocks, keep an eye out for a positive catalyst — an event that can trigger a major change in a stock’s value. For example, a big company announcing a major investment in the industry could be a positive catalyst that might drive up a stock’s price over the following few hours or days. Other catalysts could include changes in state or federal laws and regulations around cannabis.
Use a positive catalyst as a signal to start building a position in marijuana stocks.
California Marijuana Stocks to Keep an Eye On
Traders are increasingly drawn to investing in California pot stocks. Here, we list some of our favorite stocks to keep an eye on in this field. We recommend you create your own watch list to track stocks and start building a position.
CannaRoyalty is one of the companies with the most skin in the game in California. Based in Canada, CannaRoyalty has a foot in the door in six U.S. states, as well as Canada. However, the company’s primary focus is in California.
CannaRoyalty is one to look out for in part because it has a diverse portfolio, allowing it to operate without fear even if one or two of its businesses end up going under. CannaRoyalty has 10 wholly-owned subsidiaries. The company also provides debt financing or equity for growers who are looking to expand their product lines or their growing capacity in exchange for a royalty on those companies’ net sales.
While there are thousands of brands competing for shelf space in California’s dispensaries, CannaRoyalty is poised to possibly become one of the leading distributors in California. Through its acquisitions and investments, CannaRoyalty is aiming to fill an important niche in this market: distributors that act as middlemen.
Constellation Brands gets high marks due to its strong core business and the solid exposure it gives investors to the cannabis industry via Constellation Brand’s major stake in Canopy Growth (NYSE:CGC), which is the largest marijuana producer based on market cap. Canopy Growth’s long-term prospects look good for investors.
Canopy Growth is based in Canada, but it is well-placed to succeed in the U.S. market. The company plans to launch a number of products, including edibles, vape products, and cannabis-infused beverages.
Constellation Brands also owns a number of core alcoholic beverage businesses, including Modelo and Corona, that are doing very well in terms of sales growth in the U.S. market. Constellation’s beverage products, including its wine and spirits businesses, will continue to drive the company’s growth, making space for Canopy to pick up momentum in the weed market.
Plus Products (PLPRF)
Plus Products is one of the largest edibles distributors and manufacturers in California. The company’s cash balance grew from $22.4 million in December 2018 to $34.1 million in June 2019, reflecting a growing level of cash.
In the second half of 2019, Plus Products aims to expand to Nevada and to partner with TapRoot Holdings, a vertically integrated cannabis company that operates manufacturing and cultivation facilities, to sell its products.
Plus Products launched an exciting new product in September 2019 with musician John Legend, including a line of CBD-infused gummies designed to help people with sleep problems and other health issues. In a good sign for the company, the product announcement was met with a positive response in the market.
1933 Industries (TGIFF)
1933 Industries is a Vancouver-based cannabis company, but the company has been expanding in California as well as Nevada. 1933 Industries owns stakes in several cannabis companies, including 91% of Alternative Medicine Association, a cultivator of medicinal cannabis based in Nevada.
In 2018, 1933 Industries raised $6.5 million for convertible debenture financing, $13.1 million through the exercise of warrants and stock options and $17.25 million through its offering of convertible debentures. Analysts are bullish on the company’s future growth.
Harborside Health (HBOR)
Based in Oakland, California, Harborside Health was made a public stock option on the Canadian Securities Exchange earlier this year. It was the 66th U.S. cannabis company to be traded on the Canadian Securities Exchange, and it was valued at the time at $350 to $400 million.
Harborside is already a prominent Bay Area dispensary chain and is looking to establish itself as the dominant player in Northern California’s marijuana industry.
Harborside is one of the oldest licensed marijuana businesses in the country. The company is well-known in part for winning its years-long fight against the U.S. Attorney’s Office for the Northern District of California, which dropped its case against Harborside in 2016.
Harborside owns more than 24 marijuana cultivation, manufacturing, and retail licenses in California. The company is a vertically integrated operator, controlling businesses that are positioned throughout the cultivation, manufacturing process, and selling of cannabis products.
The public offering was facilitated by Harborside Health’s recent merger with Lineage Growth Co., a small Canadian cannabis company. Harborside Health merged with Lineage Growth Co. in a reverse takeover.
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