Canopy Growth Stock Cheap?
With the initial excitement over recreational marijuana now diminishing, investors have started to abandon Canada’s pot stocks in droves. But while the rec play in the cannabis space may be fading, it’s marijuana’s impact on the healthcare and pharmaceutical industries that may ultimately be strongest, so says Jim Cramer, host of CNBC’s Mad Money.
One week into legal cannabis across Canada and the downturn across the sector continues, headlined by industry leaders Canopy Growth (Canopy Growth Stock Quote, Chart TSX:WEED, NYSE:CGC), Aurora Cannabis and , all of whom have seen their share prices drop by over 20 per cent since October 17.
And while it’s still anyone’s guess how big Canada’s rec sector will become once customers’ purchasing habits settle into a recognizable pattern, the real money may in fact come from pot’s medicinal uses, which are said to become more pervasive as social acceptance of marijuana grows and further study is conducted on the newly legalized drug.
Yesterday, hedge fund manager Jim Cramer pointed to pot’s use as a replacement for opioid use, which has reached epidemic proportions in Canada and the United States — in the US alone, 236 million opioid prescriptions were dispensed by doctors in 2016, for example.
Cramer says in comparison with specialty pharma company Heron Therapeutics, one of many pharmaceutical companies currently working on non-opioid pain management therapies, Canopy Growth is a better play.
“I think we have to be careful because I’d rather see you buy Canopy because that’s a non-opioid pain killer if there ever were one,” he stated. “Canopy’s incredibly cheap with a lot of cash underneath. I’d rather see you own that stock.”
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Canopy CEO Bruce Linton has also been vocal about cannabis’ as-yet-untapped potential on the medical side, saying, “We disrupt alcohol potentially, cigarettes potentially, in terms of smoking cessation. We really disrupt pharmaceutical, because whether or not you’re geriatric care, you’re dealing with arthritic conditions, you’re someone who can’t sleep, you’re going through an oncology treatment, I think you’re going to find cannabinoid therapies really hit there.”
A StatsCan study earlier this year found that Canadians spent $5.7 billion on marijuana in 2017, with about 10 per cent of that figure going towards legally-accessed medical purposes.