Continuing our discussion on whether the cannabis industry is going up in smoke or whether this is the calm before the storm, we’ll discuss some of the indicators. First, the cannabis industry isn’t going up in smoke.
Spending on cannabis
For long-term investors in companies like Canopy Growth (WEED), Tilray (TLRY), HEXO (HEXO), and Aphria (APHA), the appreciation in the stock price should come from earnings growth. More demand for cannabis products (HMMJ) will likely boost the revenues and earnings.
In the above chart, you can see that almost 67% of Canadians purchased cannabis products in the last three months as of October 11. The numbers were before cannabis went on sale for recreational purposes in Canada on October 17.
In an article, CBC News said that the Organization for Economic Cooperation and Development’s prediction of the cannabis sector could add significantly to Canada’s GDP. On January 4, Statistics Canada will release its report on employment in Canada’s cannabis sector in 2H18.
When an industry gets its backing from the government through legalization and when it’s expected to add significantly to the economy, there’s certainly a lot of substance to the business.