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Highlights
- The dream of cannabis legalization in the US had massively boosted Canadian pot stocks in 2020 around the time of the US presidential elections. Now, however, questions regarding its possibility seem to be hurting market sentiments.
- With the US federal cannabis legalization agenda reportedly receiving tepid support in Congress, questions are now arising about the market’s expected performance in 2022.
- While significant concerns still lie, some market specialists are of the belief that the marijuana wave is still slowly sweeping into North America with state legalization.
The dream of cannabis legalization in the US had massively boosted Canadian pot stocks in 2020 around the time of the US presidential elections. Now, however, questions regarding its possibility seem to be hurting market sentiments.
After high hopes in 2020, the Canadian cannabis industry ended up recording an extended fall in stock prices in 2021. With the US federal cannabis legalization agenda reportedly receiving tepid support in Congress, questions are now arising about the market’s expected performance in 2022.
While significant concerns still lie, some market specialists are of the belief that the marijuana wave is still slowly sweeping into North America with state legalization. On February 2, for instance, Mississippi became the 37th US State to pass the medical cannabis bill.
Let us explore the performance of two TSX pot stocks on this note.
1. Tilray Brands, Inc (TSX:TLRY)
Tilray Brands, on January 25, expanded its medical cannabis footprints in Australia by increasing its product offerings and providing an online medical cannabis education platform for healthcare personnel.
The New York-headquartered cannabis company saw its top line reach US$ 155.15 million in Q2 FY2022, noting a year-over-year (YoY) rise of 20 per cent.
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The C$ 3-billion market cap pot maker improved its net income to US$ 6 million in the latest quarter, up by US$ 95 million from a loss of US$ 89 million a year ago.
Tilray stock traded in green to close at C$ 7.63 per share on Monday, February 7.
On Friday, February 4, the pot stock zoomed by over six per cent in a day.
2. Canopy Growth Corporation (TSX: WEED)
Canopy Growth, on February 3, extended its ACE Valley portfolio by launching two THC-infused new beverages (Daylight and Moonwave) and cannabidiol-infused Citrus Ginger Super hard candy formats.
The Smith Falls, Ontario-headquartered cannabis company reported a net revenue of C$ 131 million in Q2 FY2022, representing a YoY slump of three per cent.
Image source: © 2022 Kalkine Media®
Data source: Canopy Growth Corporation
Canopy Growth stocks, which are currently one of the most traded stocks on the TSX, closed at C$ 9.93 apiece on Monday.
Bottomline
The Canadian cannabis industry has been struggling for a while now. Some market analysts believe that some of the top licensed pot producers in Canada may find it difficult to remain profitable on a post-tax basis in 2022, and require upgrading their business models.
However, things can turn around if and when US federal cannabis legalization comes into the picture.
Hence, investors should ideally take a close look at the revenue, profit and other latest financial figures of a pot company and research it well before investing.
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