Time to buy cannabis (shares)

Swissquote Bank Research Team Swissquote Bank Ltd

After a selloff from July to mid-August, the cannabis industry is facing risk-off sentiment. The industry benchmark, the North American Marijuana Index, fell as much as -10.16% during that time. But fundamentals remain intact. As legalization of recreational cannabis in Canada approaches on 17 October and US legislation is expected that would force the federal government to respect state laws on marijuana, continued global expansion is expected.

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Constellation Brands, a large player in alcohol (Corona beer), has invested CAD 5 billion in Canopy Growth, its exclusive Canadian cannabis partner. The gives Constellation 38% ownership, assuming warrants are exercised. This largest-ever investment in cannabis will build and acquire assets in both medical and recreational cannabis across five continents. Similarly, a recent partnership between CannTrust and Grey Wolf Animal Health confirms the scalability of the cannabis industry. A recent forecast for the global companion animal healthcare market is estimated at $ 20 billion by 2023, an annual growth rate of 9% from 2017. Recent financials published by CannTrust confirm the growth potential, with annual revenues up 99.28%.

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Swissquote Bank Research Team

Swissquote Bank Ltd

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