The Two Most Oversold Medical Cannabis Stocks: Canopy Growth
CGS stock prices are
9% off their peaks. But a looser tax regulation may boost business margins and
some investors consider the moment to be appropriate to buy such stocks.
According to federal regulations in the United States marijuana or cannabis
with more than 0.3% THC is a Schedule 1 drug, the same as heroin, LSD, ecstasy
and magic mushrooms. Cocaine and methamphetamine are considered less harmful
and are put into the Schedule 2 group. This classification is seriously
bounding any promotions of cannabis related products and hampering cannabis
producers’ profits. The U.S. Federal law prevents any deduction of related
costs, pushing the effective tax rate up to 90%. So, any loosening of taxation
and a change of drug classification would greatly benefit cannabis producers.
Tilray reported
revenues of Can$122.8 million and a negative gross margin of Can$1.3 million
during the last quarter. So, there are no illusions that the majority of
cannabis-related business are making a loss. However, potential profits after
stocks lose most of their value may be huge even considering existing risks.
CGS stocks are traded at $2.4, a price lastly seen in the summer of 2016,
before the bubble emerged in this sector. The recovery of stock prices to the
levels of early 2022 would mean stock prices up by 300%.
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