When Canada legalized recreational cannabis on October 17, 2018, investors rushed into the emerging market to snap up stocks they expected to soar pretty much overnight in what many dubbed as the "Green Rush." Things didn't go quite to plan in 2019 as regulatory uncertainty, supply issues, scandals, and the persisting dominance of the black market meant the market massively underwhelmed, and many investors lost out big time. CGC stock is one pot stock that really felt the pinch last year, but Canopy Growth (TSX:WEED) (NYSE:CGC) is certainly making a big case to bounce back even stronger in 2020.
Canopy Growth is the largest cannabis company in the world and undoubtedly a leader in the Canadian market, especially given the downfall of CannTrust Holdings (TSX:TRST) (NYSE:CTST). The company was founded by pot pioneer Bruce Linton, widely regarded as the figurehead of legalization; however, he was ousted in June after Canopy's biggest backer, Constellation Brands (NYSE:STZ), grew unhappy with the widening losses of the pot firm. CGC stock fell over 70% at certain points in 2019.
However, recent weeks have been much kinder to Canopy and its investors, and the company's certainly setting out its stall for a hugely successful 2020 for the following two reasons.
A lack of retail visibility has been one of the biggest issues plaguing the industry thus far, but the tide looks to be changing in that regard. Ontario recently announced that it would be increasing the cap on the number of stores allowed in the province, and Canopy Growth rushed in to seize that opportunity. Just last week, the company announced that it would it will be opening five new stores in Canada's most populated province, bringing its total presence to 37 stores and driving double-figure gains for CGC stock since the turn of the year.
Cannabis was legalized in two waves in Canada, with flower and oil products the first to be rubber-stamped in 2018, followed by derivative products such as vapes, edibles, and beverages a year later. This second wave is known as Cannabis 2.0 and has been heralded as the saving grace of the market, and Canopy Growth has invested heavily in these much sought-after products. Boasting a broad range of 2.0 products, including chocolates, several lines of infused beverages, and a host of vape products, CGC stock looks sure to be a major gainer as these products arrive in the coming weeks.
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