With marijuana stocks providing investors with wicked returns, vegetable growers who already have much of the infrastructure in place to cultivate cannabis are getting involved with legal weed. There is speculation that this transition could eventually provide some exciting new opportunities for investors in the cannabis trade.
Although Canada has had a medical marijuana market in place for sometime, the northern nation plans to implement a fully legal recreational market later this year. Since marijuana has proven to be a more profitable industry than operating a greenhouse that manufactures tomatoes and bell peppers, companies like Village Farms are reportedly making the transition from grow marijuana. The company has already converted a large portion of its vegetable greenhouses to marijuana cultivation. The company had the top-earning marijuana stock in 2017, according to the Motley Fool.
The situation has convinced other produce growers to get serious about growing marijuana. It was just weeks ago that the largest grower of tomatoes and sweet peppers in Scandinavia (Alfred Pedersen & Sons) announced a partnership with a medical marijuana firm. The company, which will dedicate millions of acres to growing weed, plans to sell medicinal cannabis to Denmark, Sweden, Norway, Finland and Iceland.
In addition, Betrand, which operates hundreds of thousands of tomato growing spaces, recently entered into a deal the same marijuana company. It will convert a significant amount of its greenhouses to cannabis rather than vegetables. The company plans to make the transition in the coming months and begin production by later this summer.
Although most produce companies are not publically traded, The Fool’s Keith Speights suggests that investors might want to look into purchasing stocks from the companies that are.
“Village Farms hasn’t converted all of its production capacity to growing marijuana,” he explains. “I suspect that the company will rapidly switch to marijuana, though, especially if the demand for recreational marijuana in Canada is as great as some predict.”
Speights also recommends that investors consider stocks involving partnerships between medical marijuana firms and produce farmers.
As long as the Canadian pot market goes off without a hitch, investors will likely see large returns.
But there is always a chance that the bottom will drop out.
“Keep in mind, however, that buying marijuana stocks comes with a great deal of risk,” Speights said. “If there’s a delay in legalization of recreational marijuana in Canada, for example, it’s likely that the stocks will tank.”
