The marijuana sector has been one of the most popular trends in the past year. The Horizons Marijuana Life Sciences ETF has grown over 70% last year, surpassing the S&P500 that only achieved 45% growth.
This spicy popularity can be attributed to several U.S. states passing legislation permits for recreational marijuana. Even though these developments don’t necessarily mean instant prospects for expansions within the U.S., many speculate that it might as well be guaranteed.
However, competitors inside the U.S. have begun to move, and some investors are worried that this momentum might die out.
Will Canadian pot stocks experience another crash?
The Canadian marijuana industry did well during the pandemic. Its performance exceeded expectations, and retail sales increased to nearly 300 million Canadian dollars, almost doubling the amount from the start of the year.
However, during January 2021, sales fell 5.6%. An optimistic might tell you it was a one-month decline, but that’s not realistic.
You want the truth, and this is it: Canadian cannabis producers have been having a hard time growing their sales.
Aphria (NASDAQ:APHA) only experienced a 6.4% net sales growth for its most recent quarter compared to a year ago, which is way below expectations.
OrganiGram (NASDAQ:OGI) reported something even more dreadful, with net revenue down 37% year over year. The company had to shut down in New Brunswick after several positive COVID cases were reported.
The Canadian cannabis industry has been around for quite some time since it’s been legal in the country since 2018. Organic growth has been more complicated in recent times.
U.S. Cannabis companies are performing better
New markets continue to appear in the U.S., making it a lot easier for local companies to grow.
Trulieve Cannabis (OTC:TCNNF) grew its revenue by 106% in 2020 to a total of 521.5 million dollars. The company recently obtained approval to start doing business in Massachusetts.
Another U.S. company, Green Thumb Industries (OTC:GTBIF), did even better. Its sales last year came in at a whopping 556.6 million dollars, increasing 157% year over year. If that wasn’t enough, its presence in New York and New Jersey makes it a prime player in the biggest markets where they recently legalized cannabis.
Is it time to bail on Canadian pot stocks?
Canopy Growth is Canada’s most famous pot stock. Its premiums are highly valued, and the other Canadian pot companies are not cheap.
Given recent numbers, it seems that the Canadian pot stocks will likely become stagnant for a while. For this reason, many investors are looking towards growth potential in U.S.-based companies.
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