Marijuana stocks are finally getting their time in the sun. With Democrats taking control of both houses of Congress as well as the White House, cannabis names like Canopy Growth Corp. (NASDAQ:CGC) stock are on a tear.

So far this year, Canopy Growth is up 47%. That’s largely on hopes that President Joe Biden and congressional Democrats will legalize marijuana use on a federal level.

If it happens, CGC stock and other cannabis names are likely to soar.

Let’s take a closer look at Canopy Growth. It’s the largest of the major Canadian legal cannabis producers, by both revenue and market share.

CGC Stock at a Glance

For much of 2020, CGC stock was a disappointment. It fell by around 45% when the novel coronavirus pandemic took hold in North America. It really didn’t begin recovering until close to Election Day.

Since its October low, however, Canopy Growth is up almost 170%. And that’s despite a dip triggered by its Feb. 9 earnings statement.

The company reported revenue in the fiscal third quarter of 152.5 million CAD, versus estimates of 148.98 million CAD. While that slightly beat expectations, it also represented a loss of 2.43 CAD per share thanks to impairment and restructuring costs. The market had expected a loss of only 27 cents per share.

Despite the big loss, there’s reason for some optimism. First, it’s important to recognize that revenue rose 23% on a year-over-year basis, and 13% from the previous quarter.

CEO David Klein projected that CGC stock would have a compound annual growth rate of 40% to 50% from 2022 to 2024. The company is also projecting to turn a profit in fiscal 2023 and 2024.

Projected profits includes sales in the U.S., Klein told analysts. The company is projecting it will enter the U.S. market this calendar year.

“We’re somewhat limited in what we can do in the U.S., but that doesn’t mean we’re not doing things like building out our routes-to-market, building our production infrastructure and keeping our eye very closely on the market, developing products specifically for North American consumers that will test out in Canada and be able to bring to the U.S.”

Congressional Approval Is Needed

In his presidential campaign, Biden promised that his administration would support legalizing medical marijuana, as well as expunging criminal convictions for cannabis-related offenses.

The House passed a bill in December that would have kept that promise. But it died in the Senate, which was controlled at the time by Republicans.

Now the Senate is split 50-50, with Vice President Kamala Harris as the deciding vote. That gives control of the upper chamber to Democrats. Remember, while Harris was in the Senate in 2018, co-sponsored legislation that would end the federal ban on marijuana. So, there’s every reason to believe that the White House, as well as the Democratic-controlled Congress, will move forward.

But getting there may be a challenge.

While a recent poll shows that 68% of Americans questioned support marijuana legalization, the Biden administration is focused on the Covid-19 pandemic and getting vaccines in the arms of Americans. It’s focused on urging a reopening of schools, of giving the economy a boost and pushing through a $1.9 trillion stimulus plan.

Those priorities are going to take some time to accomplish. All of them are arguably more pressing than marijuana legalization.

Patience may be key here.

The Bottom Line

There’s significant momentum for cannabis stocks right now, and all indications suggest that the U.S. will take up legalization on a federal level as early as this year.

And CGC stock has deep pockets. Remember, Constellation Brands (NYSE:STZ) has a 38.6% stake in CGC stock. Constellation is the owner of Corona beer, Kim Crawford wines and Svedka vodka. It knows how to set up distribution routes in North America, and can possibly allow CGC brands to piggyback its distribution channels.

CGC stock has a “B” rating and a buy recommendation in my Portfolio Grader right now.

— Louis Navellier and the InvestorPlace Research Staff

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Source: Investor Place