While the stock market is thriving since an initial downward spiral at the beginning of the COVID-19 pandemic, marijuana stocks have continued to struggle. This is prompting seasoned investors to consider possible alternatives to cannabis stocks.
Cannabis Investors Disappointed in Stock Performance During Coronavirus Pandemic
It was expected by many that cannabis stocks might thrive during the COVID-19 pandemic because customers who were stuck at home would seek out marijuana from retail stores. This optimism was only emboldened when states declared that marijuana dispensaries are “essential businesses” that can remain open despite shut-down orders being issued for most other businesses. Unfortunately for investors in cannabis stocks, the subsequent rise in demand for recreational marijuana has not translated to gains in the market.
Some of the worst performers among cannabis stocks include Aurora Cannabis, ETFMG Alternative Harvest ETF, and Tilray. In just a few months, ETFMG Alternative Harvest ETF saw its value plummet by more than 30%. The losses for investors in the Canadian cannabis company Aurora Cannabis were even greater: the stock has plummeted by 50% since February. While Aurora Cannabis was able to remain on the New York Stock Exchange thanks to a reverse split, the move did not boost the stock price: shares in the high-profile marijuana stock have continued to drop.
Investors in Cannabis Stocks Not Seeing Strong Returns in 2020
One possible explanation for the plunge in values of marijuana stocks is that investors might be reacting to a number of negative assessments of the global economy as the coronavirus pandemic continues. Many well-respected institutional investors are cautioning against buying into the stock market’s recent rebound because unemployment numbers remain high. This pessimism has not stopped investments in the stock market generally, with the Nasdaq hitting a record high and the S&P 500 approaching its own record high.
However, cannabis stocks have not been so fortunate. Investor confidence might be waning because of the new challenges faced by cannabis companies during the pandemic: delayed state approvals of operator licenses, operational difficulties faced by cannabis companies with limited access to capital, scaled-back operations by smaller retail marijuana businesses, and uncertainty about a possible “second wave” of the COVID-19 pandemic.
Investing in Cannabis Real Estate Funds as an Alternative to Marijuana Stocks
Cannabis stocks may be struggling, but there is still plenty of good news for investors in the cannabis industry: more and more states seem likely to legalize both recreational marijuana and medical marijuana, sales of recreational marijuana in the U.S. have more than doubled over the past year, and the international market for medical marijuana is thriving.
Moreover, there are strong alternatives to marijuana stocks for anyone looking to invest in the burgeoning cannabis industry. One of the best options for prospective investors is a privately held cannabis real estate fund that owns income-producing properties such as marijuana dispensaries and marijuana cultivation facilities. These types of investments can be considered more reliable and secure than cannabis stocks because, unlike stocks, cannabis real estate funds are more personalized. When you invest in a marijuana real estate fund, you know exactly what you are getting.
Contact Scythian Cannabis Real Estate Today
Scythian Real Estate Fund LLC is the Colorado-based real estate partner of several well-capitalized, highly sophisticated cannabis operators that are expanding nationally. Through its longstanding relationships with retail marijuana companies like The Green Solution and Grassroots Cannabis, Scythian Real Estate has built a premier single-tenant real estate portfolio valued at nearly $40 million. For more information, email Scythian Real Estate today.
PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.