Cannabis stocks have been on a downtrend in these past years. Some stocks may never recover to their all-time highs. With the legalization of cannabis opening up in several states, shouldn’t the cannabis stock market be going up? Could it be that the cannabis market is oversaturated? Were cannabis stocks overpriced? Can cannabis stocks avoid a market downturn?
What Caused The Cannabis Stock Market Downturn?
When Tilray stocks were available for sale, the stock immediately saw a 500% growth within three months. This shows that Tilray was overbought and overpriced at the time. Many people bought the hype of this cannabis stock, and the stock will probably not be getting close to it’s all-time high in the coming years.
While Canopy Growth Corporation was doing great, it ended up being bought because of the 2018 cannabis hype as well. CGC ended up recovering extremely well at the start of 2021. But there was a massive sell-off after this. The people that held on during the beginning of the pandemic took the opportunity to sell. Since then, Canopy Growth Corporation has been on a downturn.
The same thing happened to Aurora Cannabis. People bought the hype and the stock ended up being overbought. While ACB was doing fine despite being overbought, its growth was stalled by the pandemic’s economic fears. Just like the entire global economy.
So, what caused the cannabis stock market downturn?
The hype of cannabis stocks in 2018, many cannabis stocks ended up being overbought.
Why hasn’t the cannabis stock market recovered?
The COVID-19 pandemic caused a global economic decline and halted the growth of many markets. Including the cannabis market.
Now, is there still hope for cannabis stocks?
Absolutely. Things are looking great for the cannabis market.
The Pandemic Is Over, Economic Growth Can Be Established
Cannabis stocks were not the only stocks affected by the pandemic. It’s possible that the entire COVID-19 pandemic period has created a global bear market.
Travel stocks and international equity stocks had their growth stalled due to the lack of travel, international trade, and tourism.
But now, the pandemic which crippled our economies globally, is over.
As a result, stocks are now able to recover to pre-pandemic prices and grow even further.
Legalization Is Growing, Opening Up Business Opportunities
Along with the pandemic being over. Legalization is rapidly opening up in the USA.
In 2021, Virginia, New Mexico, Mississippi, Alabama, Louisiana, and Connecticut legalized marijuana. With more of America voting in for legalization in 2022.
As more markets open up for the sale of cannabis, the cannabis market will see increasing business.
Products such as branded cannabis beverages, cannabis supplements, assorted cannabis products, are being developed.
If these business trends are successful we may be seeing what’s called product adoption.
Product adoption is when consumers are more inclined to buy and use these products.
The steps a buyer’s journey includes awareness, interest, consideration, trial, and adoption.
As a result, if marketing of new cannabis products are successful, sales are increased, and the cannabis stock market can flourish.
Volume Is Increasing, Interest In The Market
Buying volume is rapidly increasing for all cannabis stocks.
Volume means people are ready to come back in the market.
People are highly interested in cannabis stocks once again.
The more news that comes out about cannabis, the more volume.
The more volume increases, the more buying pressure there is.
Can cannabis stocks avoid a market downturn?
Downturns will always be part of the economic markets. Cannabis is no exception.
However, there is a growing future for cannabis. There is a chance cannabis will eventually be legal in all states in the USA. However, there are still 32 states in the USA that have yet to legalize cannabis. This is good.
As long as there is reoccurring news of cannabis legalization, business opportunities and interest in the cannabis market will increase.
People will not want to miss out on cannabis stocks due to the potential of a world where cannabis is as popular as tobacco and alcohol. If cannabis does reach that stage, it’s likely that cannabis could avoid future market downturn.
Have you invested in cannabis stocks? Do you believe in the cannabis market? What are your thoughts on the future of cannabis as legalization spreads? Let us know in the comments below. Follow us for more cannabis info.