Is it Time to Load Up on Pot Stocks? - InvestingChannel

Is it Time to Load Up on Pot Stocks?

Shares of marijuana companies have been rising in recent days. A vice presidential debate last week and Kamala Harris vowing to decriminalize marijuana sent many pot stocks into a frenzy. Shares of Canopy Growth (TSX:WEED)(NYSE:CGC) finished last week at $23.66 – the highest the stock’s been in about two months. Aphria Inc (TSX:APHA)(NYSE:APHA), which reports its earnings this week, also jumped to $7.53 by last week’s close – a price it hasn’t reached since July.

There’s definitely a lot of bullishness and what’s interesting is that Canadian pot stocks saw a lot of it.

The industry’s known to be hyper-sensitive on news, whether it’s good or bad, and so this type of volatility shouldn’t be a surprise. However, it’s arguably not really news since it’s been clear in the past that if Biden were elected in November as the new U.S. president, it could lead to the decriminalization of marijuana.

But decriminalization also isn’t the same as legalization, and investors need to be careful not to connect dots that aren’t there. Legalizing pot would certainly excite Canadian cannabis companies as it would pave the way for them to enter the U.S. market, but there’s no guarantee that will happen under a Biden presidency. Similarly, it may not make life easier for U.S.-based pot stocks, either.

You shouldn’t load up on pot stocks, especially Canadian ones, on this news. However, buying U.S. cannabis stocks may not be a bad idea as there are four states voting on recreational pot in November, and that could open up more opportunities for them and generate a lot of excitement in the industry.