When a major market legalizes marijuana, stocks in the industry may shoot up on news of the law’s passage. Even if it doesn’t guarantee that every company will profit, it may help to highlight the industry’s potential for growth and remind investors of the prospects available.
That is what the sector needs right now–some form of good news to get investors interested in the industry again. And it might not be very long before it arrives.
Is it possible that Germany will legalize marijuana in the near future?
Last year, a new government was elected in Germany under Olaf Scholz, who took the helm after Angela Merkel served 16 years as chancellor. Cannabis has also gotten a lot of attention since the shift in power. Medical marijuana is legal in Germany, but the government is considering allowing adult-use cannabis as well. Furthermore, there’s a lot of incentive to do so — some projections predict it will generate over $5 billion in cost savings and tax revenue for the nation. There may be 27,000 new employment opportunities as well.
This may be beneficial to multiple cannabis companies.
Tilray Brands (TLRY 14.60%) Canadian cannabis producer is one company that is ecstatic about these possibilities. One part of its ambitious plan to reach $4 billion in yearly sales by the end of fiscal 2024 (which ends in May) involves capitalizing on the European market. Tilray already has a medical distribution firm, CC Pharma, in Germany, which may aid it to speed up growth across the continent. CC Pharma has a network of European suppliers with which it collaborates and has “preferred access” to almost 13,000 pharmacies in Germany. For the last fiscal year (which covers the period from April 1 through May 31), distribution revenue for the company (which is primarily generated by CC Pharma) was $277.3 million.
Tilray’s sales over the last year were $617 million, suggesting it may be difficult to achieve its aggressive goals in such a short time. It will undoubtedly profit from the possibilities in Germany, but management might be too optimistic about how the firm will perform.
Is it now a good time to invest in cannabis?
The cannabis industry, on the other hand, appears to be a sleeping giant at the moment. Investors appear to have abandoned it, but there are some huge possibilities out there. When optimism has returned to the sector (and legalizing marijuana in Germany might do the trick), stocks could surge as many of them appear overdue for a pick-up in enthusiasm. Buying ahead might provide substantial gains later for investors who buy early.
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