The Effects of Corona Virus Pandemic On Cannabis Stocks

Impact of COVID-19 on marijuana stocks

The COVID-19 pandemic has affected nearly every part of the global economy, including the cannabis industry. In many U.S. states, cannabis dispensaries were designated as essential businesses. Cannabis sales boomed in some states during the first few months of the coronavirus outbreak, driven in part by more time spent at home and increased anxiety. Marijuana growers and retailers benefited, as did ancillary providers selling gardening supplies and other products to these companies.

However, not all cannabis companies have fared well in the pandemic. Recreational cannabis retailers in tourist destinations such as Las Vegas saw their customer traffic dwindle, causing some of these dispensaries to start focusing on home delivery. In the medical segment, people delayed doctor visits, causing new patient starts to drop. Biotech companies experienced logistical challenges that affected sales and research progress.

Many U.S. cannabis companies appear to be performing well in the wake of the COVID-19 pandemic. However, several Canadian marijuana companies continue to face headwinds, with restrictions on retail cannabis stores still in place.

But, Really, Should I Buy Marijuana Stocks?

Just because there’s a trendy new sector with lots of press and potential growth doesn’t mean you need to invest in it. If you buy broad-based index funds, you’re covered no matter which sectors of the stock market do well. Conservative investors who prefer lower risk are likely better off avoiding investing in marijuana stocks.

But aggressive investors with high risk tolerances will probably find a lot to like about marijuana stocks. The cannabis industry is still in its early stages, and the market opportunities are enormous, especially as more U.S. states legalize cannabis. Investing in pot stocks is a high-risk but potentially high-reward proposition.