Investing in the cannabis industry has been a source of debate among retail traders for some time. The legalisation of recreational and medicinal cannabis has been on the agenda for several countries in recent years, leading many to anticipate an investment surge in the pioneering cannabis stocks on the exchanges worldwide.
However, only Canada and Uruguay have formally legalised the commercial sale of cannabis for recreational use thus far. In the Netherlands, the drug remains illegal outright, but is legal for commercial sale in licensed cafes as well as personal use.
In the US, the policy towards cannabis has been developed on a state-by-state basis, with Joe Biden’s inauguration as President yet to commence federal legalisation nationwide. Nevertheless, medical cannabis is now legalised in over 50 nations globally, and it’s this trend which is helping to power the leading cannabis stocks from an investment perspective.
Below, we explore a host of cannabis stocks available to invest in as part of the Cannabis Equity Basket at Saxo Bank. It's worth noting that the Cannabis Equity basket is one of the lesser performing Equity Baskets at Saxo this year-to-date, being outranked by high performers like our Commodities and Defence Baskets. However, the development within the Cannabis Equity basket is still worth exploring.
The performance of cannabis stocks globally in the past 5 years
It has been far from plain sailing for investors in the cannabis industry in recent years. Since the performance of cannabis stocks peaked at an average value of $142 in January 2018, it has been a downward trend ever since, falling to average lows of $17.25 in March 2020.
2019 was a particularly turbulent year for cannabis stocks. This was the year that cannabis investing was meant to evolve from pure speculation into legitimate long-term investments. Delays in licensing application approvals by Health Canada, the nation’s regulatory agency, inhibited recreational sales and stunted production of mainstream and derivative products. Meanwhile hefty taxation on US cannabis companies - coupled with the US being no closer to federal reforms of its cannabis legislation - and the hemorrhaging of money by many brand-name cannabis stocks, created continued uncertainty in the financial markets.