With the Democrats in control of the White House, Senate, and the House, there's plenty of reason for cannabis investors to get excited about the sector's prospects. Not only are more states legalizing recreational use of pot, but there's some real potential for more marijuana reform to happen at the federal level.
Even if it's not the outright legalization of marijuana, just passing bills related to safe banking would be great news for the industry and help bring down costs and potentially make companies less dependent on share issues to fund their growth.
This year is shaping up to be a positive one for the industry and that's one of the reasons Canopy Growth Corporation (TSX:WEED)(NYSE:CGC) is up over 50% in the past three months. Even though the company is based in Canada, Canopy Growth investors are bullish on the potential for the company to benefit from a broad legalization movement in the U.S.
Although there aren't any guarantees when legalization may happen, the recent developments are enough to get the stock moving.
However, cannabis investors are better off looking at U.S.-based pot stocks. They're more likely to benefit from marijuana reform as legalization may not happen under Biden.
Companies like Trulieve (C.TRUL) and Curaleaf (C.CURA)could prove to be much better buys this year than Canadian-based pot stocks as they'll benefit from greater market opportunities and any marijuana reform in the U.S. will more directly impact them. Although the cannabis industry could be poised for a great year, investors need to be careful as it doesn't mean that every pot stock is a good buy right now.
