The U.S. and Canada may share a border, but there are differences in how both countries view marijuana. The U.S. has multiple restrictions since marijuana is still considered a Schedule 1 controlled substance at the federal level. As of November 2020, a total of 35 U.S. states and the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands allow marijuana for medical use. Multiple states are still dealing with the issue of recreational usage.
In 2001, Canada approved the use of marijuana for medical usage, which resulted in a greater evolution of the marijuana industry in the country. In 2018, Canada legalized recreational marijuana use nationwide. While uncertainty prevails in the U.S., here’s how investors can buy Canadian marijuana stocks.
What are the top marijuana stocks to buy?
Currently, the marijuana industry is booming in the U.S. and Canada. From producers to marijuana-specific marketing firms and dispensaries, the opportunities to profit from this fast-growing industry are limitless. Here are the top marijuana stocks to buy in 2020:
Canopy Growth is touted as Canada’s first unicorn in the marijuana industry. Although the company sells its products under different brand names, the brand “Tweed” has the greatest popularity due to its association with rapper Snoop Dogg. The company started trading on the NYSE on May 24, 2018. Canopy Growth stock has risen by about 17 percent YTD.
Aurora Cannabis is one of the world’s largest and fastest-growing marijuana companies. In addition to growing dry marijuana, Aurora was granted a license to sell marijuana oil in January 2017. In May 2018, Aurora acquired MedReleaf for $2.5 billion. The company continued its acquisition strategy by purchasing organic marijuana producer Whistler Medical Marijuana in 2019. Aurora stock started trading on the NYSE in October 2018. The stock is down 57 percent YTD.
Aphria positions itself as a low-cost marijuana producer. The company manufactures dry marijuana as well as marijuana oil of different qualities and strengths. Aphria stock started trading on the NYSE in November 2018. The stock moved to the Nasdaq in June 2020. The stock is up 6 percent YTD.
Cronos Group is an investment firm that invests in marijuana growers and companies in the marijuana business. The Canadian firm manufactures its own marijuana products and also invests in other marijuana firms. Cronos stock started trading on the Nasdaq in February 2018. The stock is down 6 percent YTD.
Hexo is the first licensed medical marijuana manufacturer based in Quebec. The company focuses on recreational marijuana use. Hexo stock started trading on the NYSE in January 2019. The stock is down 48 percent YTD.
How to buy Canadian marijuana stocks
If you would like to trade stocks on the Toronto Stock Exchange, or simply buy stock in Canadian firms, here’s what you will have to do.
- You have to search for a U.S. listing. For a U.S. investor, the simplest way to buy stock in a Canadian firm is to find one that trades on the Nasdaq or the NYSE. Hundreds of Canadian companies have listed their stocks on U.S. exchanges.
- You need to understand the financial and tax implications. There will be potential tax implications if you own shares of a foreign company. You will also have to convert your base currency into Canadian dollars before trading. The exchange rate fluctuates on both a daily and an hourly basis.
- You will need to select an international trading platform. You will need to open an online brokerage account with Canadian stock brokers. For example, Interactive Brokers, E-Trade, and PennTrade are some of the most common options for trading stocks in the Canadian markets. Once you select an international trading platform, you can make your first purchase.