Will Cannabis Fever Have Marijuana Penny Stocks Smoking Up Trading Accounts In November 2020?

Editors' note: This article discusses one or more penny stocks and/or microcaps. Such stocks are easily manipulated; do your own careful due diligence.

The U.S. Presidential election is still at odds with who the winner will be. With proposed recounts and even misinformation, investors continue speculating. What will a Biden win mean for stocks? What will a Trump win mean for stocks? Furthermore, which sectors should be in focus? Renewable energy tends to lean toward a Democratic victory, while coal and oil are more Republican-leaning. 

One thing we can say, no matter what is that at a state level, new legislation on cannabis has made a dent in the amount of access there’s been given for both investors and consumers alike. There are now fewer states without legalized cannabis than states with recreational and/or medical access. 

Significant victories in New Jersey and Arizona marked somewhat of a tipping point of the industry. Specifically, New Jersey’s proximity to the Empire State has some thinking that it’s inevitable for New York to become one of the next to legalize weed recreationally. 

What Does This Mean For Marijuana Stocks?

The upbeat sentiment is in play this week, which has helped create that FOMO for both marijuana penny stocks and “blue chips” alike.  Further light shining on a potential Democratic victory has some traders citing remarks made on the Biden/Harris election trail. 

“We will decriminalize the use of marijuana and automatically expunge all marijuana use convictions and incarceration for drug use alone."

- Sen. Harris in a Townhall event earlier this year. 

We all know that a lot can change when it comes time to fulfill election promises. The tides seem to have turned for the industry. Compared to where it was just a few years ago, now we’ve indeed seen how billions of dollars have flooded into the arena. Yet there is still much more road to tow. These latest wins in the U.S. continue affirming that it’s not just North America but the continental United States that could present some of the more significant opportunities. Based on this, a more specific focus is being placed on multi-state operators right now. 

One of the newer marijuana ETFs to signal the trend is the AdvisorShares Pure U.S. Cannabis ETF (MSOS). Some of the top holdings in the fund include dually listed cannabis companies. Many of these are unreachable by the famous “Robinhood crowd.” But the MSOS ETF is. It gives access to those who either cannot trade OTC stocks or who simply won’t. 

Top holdings of MSOS include Green Thumb Industries (GTBIF)  at 9.87% weight as of November 4th, Curaleaf Holdings (CURLF) at 9.39% weight, Cresco Labs (CRLBF) at 9.27% weight, Trulieve Cannabis (TCNNF) at 8.92% weight, and Innovative Industrial Properties (IIPR) at just under 7.3% of the fund’s holdings. This accounts for nearly 45% of the assets for MSOS as of November 4th.

Are Canadian Names Still Good Penny Stocks On Robinhood To Buy Right Now?

Obviously, with an estimated 5 million new accounts on Robinhood between January  & September, there’s still plenty of speculation on which marijuana stocks to buy. But when you’re speaking about apps like this and Webull, access is limited to NYSE and NASDAQ stocks, for the most part. Aside from MSOS itself, the only other stock in the top 45% of the ETF that is tradeable on Robinhood is IIPR. Other than that, you’d need to use a broker like T.D. Ameritrade, E*Trade, Schwab, etc.

So, this leaves a relatively large barrier to entry for traders looking for marijuana stocks on Robinhood and Webull. In this light, we’ve seen a flight to individual Canadian pot stocks this week. Shares of cannabis penny stocks that just recently graduated to above the $5 level include debt-burdened Aurora Cannabis (ACB) and Aphria Inc. (APHA). You’ve also got the likes of Organigram and even Hexo experiencing a surge in buying momentum. 

While only a few have a small footprint in the U.S., Aphria recently pushed forth in its pursuit to link up with an established brewing company this week. Sweetwater Brewing, known for its pot-related branding, inked a deal with the pot company. The strategic arrangement has Aphria putting up $300 million U.S. with an expected close before the end of the year. Not only does the deal give Aphria access to a U.S.-based brewing company’s operations, but it also provides the company with footing in what could become one of the largest cannabis markets in the world. 

Time To Go All In On Pot Stocks?

But even in this light, Canadian pot stocks may still merely be benefiting from sector sympathy right now. With an army of 5 million new traders, though, it’s hard to argue that pot stock fever isn’t becoming a key driver to momentum this month. Nearly all marijuana stocks have seen some type of rise. Even some penny stocks that have pivoted from cannabis have benefited from this latest move. 

NewAge, Inc. (NBEV), for instance, has mirrored the sympathy move that most marijuana penny stocks have seen this week. Prior to recent developments, the company had focused on a line of CBD beverages. NewAge has since rebranded itself into an omnichannel retailer of “healthy products.” 

Its latest deal is planning to see the company complete the combination with ARIIX and four other e-commerce and direct selling companies. NewAge expects this combination to generate revenues upward of $500 million across more than 75 countries worldwide. While NBEV stock has expressed its optimism around closing this deal and consumer staples stocks have helped give it a boost, the recent momentum has coincided more with the move that marijuana penny stocks have made this week. Since Monday, the stock has climbed more than 35% as of Friday’s morning high of $3.27.

Regardless of the hype, once it dies down, which it inevitably has done periodically over the last few years, the focus is likely going to be on multi-state operators. The fact that not all 50 states have legalization in place and that the future is still unconfirmed for federal legalization means that there could be many more layers of opportunity to peel back for the time being. The biggest thing to be positioned for is if (or when) new legislation comes, where will big money bets get placed? 

Disclosure: None. 

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Weed Investor 3 years ago Member's comment

Good read, thanks.

Small Cap Reporter 3 years ago Contributor's comment

appreciate it! Thanks for reading

Susan Miller 3 years ago Member's comment

@[Lorimer Wilson](user:22485) and @[James Coleman](user:122484), what are your thoughts on this?

Cannabis Stock Buyer 3 years ago Member's comment

I was excited to see that every state which had drugs on the ballot, passed.

Dan Richards 3 years ago Member's comment

Right now, America is a country more dividend then ever before. Yet it's nice to see we are still united when it comes to our drugs!