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2 Pot Stocks That Could Skyrocket on U.S. Marijuana Decriminalization

By Eric Volkman - Jan 27, 2021 at 2:00PM

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A pair of weed companies have been waiting patiently at the altar to wed, but they need a big change in U.S. federal law before that happens.

Two partners -- Canada's Canopy Growth (CGC 5.01%) and U.S. peer Acreage Holdings (ACRGF) -- are currently at the altar, waiting and eager to get married and create a marijuana stock powerhouse. But something major has to happen on the federal level first.

Veteran Fool contributor Eric Volkman discusses the situation with healthcare and cannabis bureau chief Corinne Cardina in this video clip from Motley Fool Live recorded on Dec. 22, 2020.

 

 

Corinne Cardina: There are some deals that have been pending out there in the cannabis industry. They're pending because they are saying if the U.S. legalizes, not decriminalizes, cannabis, we're going to join forces. The one that comes to mind, of course, is Canopy Growth and Acreage.

I'm wondering what federal decriminalization would mean for some of these deals that are contingent on legalization?

Eric Volkman: Well, the Canopy Growth, Acreage thing, I don't think there's much wiggle room for decriminalization. I think it has to be legalization.

They revised the deal a little while ago, but it was the details and the finances. I don't think it changed the language. I think it's still dependent on legalization. Which still makes something like Acreage Holdings compelling because decriminalization -- if it does go down -- we can see this as a step to eventual full legalization. I don't think it's going to stay in that funny legal limbo. I don't think marijuana's gonna stay in that funny legal limbo forever.

It's just a question of when. Everything with marijuana is so incremental and it doesn't seem like the liberalization around the world and in this country doesn't seem to really snowball. It fits and starts and then it steps back a little bit, and then all of a sudden a few states legalize and then a bill gets stuck in Congress.

I think it will be a matter of years before something like that happens and Acreage could really benefit, which would also be greatly to the benefit of Canopy Growth. Because the beauty of this deal is that at a stroke, it makes Canopy Growth a player in this country which gives it a solid position here, and Canopy can use that as a springboard to really crank up scale in the U.S.

Which it needs to. The Canadian market is nice and open, but it's very competitive. It's got a lot of challenges. All Canadian producers, pretty much all of them lose money on a fairly consistent basis. They look south of their border and their mouths water. They really want into this market as soon as it liberalizes even just a little bit.

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Stocks Mentioned

Canopy Growth Stock Quote
Canopy Growth
CGC
$5.87 (5.01%) $0.28
Acreage Holdings, Inc. Stock Quote
Acreage Holdings, Inc.
ACRGF

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