Tilray (TLRY) and WEED: 2 TSX cannabis stocks to buy in July

Marijuana stocks and the companies they represent are quite popular among investors, especially young investors. Since the industry is comparatively new, thanks to its legalization, it might have scope for further growth, which may be quite notable if both recreational and medicinal uses are further adopted by other countries in the world. The coming years may see further mergers and acquisitions in the industry that may leave only a few marijuana giants, the way it is with tech stocks.

It is hard to say which is the best cannabis stock in a market because stocks are subject to change based on market conditions. At the time of writing this, the top TSX cannabis stocks were Tilray (TSX:TLRY), Canopy Growth Corporation (TSX:WEED), Aurora Cannabis Inc (TSX:ACB) and Cronos Group Inc (TSX:CRON). The cannabis sector can be a little erratic at times and so perhaps it is best to consider well-established companies with big market caps. The above four are the TSX cannabis companies with billion-dollar market caps.

Cannabis seems to be a growing sector as of now. As more and more countries warm up to the potential medicinal benefits of cannabis, besides the legalization of its recreational use, it may help the Canada-based players that are developing expertise in the sector. The stocks might perform well in the longer horizon as the industry finds new markets outside of the home country. But there are downside risks as well as the sector may have passed its high growth phase.

In the US, the legalization of cannabis is a bipartisan issue. Over two-thirds of Americans say it should be legal for recreational use and 91 per cent agree it should be allowed for recreational or medical use. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act is expected to be okayed by the House before the Senate votes. Both major parties seem to agree on its legalization, at least. This might bode well for Canadian pot companies as they have the infrastructure already in place to produce and the research with regards to product creation. The big Canadian companies might look to expand into the US, if or when it is legalized. They may be possibilities to acquire smaller firms to aid in expansion.

In order for any stock to be a good investment in the long term, a lot depends on the sector the company operates in. Marijuana could be considered a growing sector as Canada-based producers have yet to tap the wider international market. If the global market welcomes marijuana products for their potential healthcare benefits, it might make the Canadian-listed stocks a good investment for the longer horizon. M&As with producers in other locations might also help these stocks to maintain dominance in the market.