The cannabis market is one which is undergoing a great deal of change because it was illegal, now it some states and Canada it is legal. It is expected over the next 5 years, cannabis will be legal in all of the United States. Because it is still illegal, there are rules which limited legal Cannabis companies. One of the rules is if the drug is illegal, then the stock can not trade on the New York Stock Exchange. According to an article by Mark Rendell and Jameson Berkow, half of the states have legalized cannabis for either medical or recreational use.
One of the leading cannabis companies is Canopy which is partly owned by the alcohol company Constellations Brands. Canopy is paying Acreage Holdings $300 for the right to purchase the company for $3.4 billion if pot and when pot is legalized in the US.
Due to the fact, a rights offer is not ownership, the deal does allowed for a change in ownership if, the law changes. In the meantime, Canopy, Acreage and Constellations can learn from each other as the companies evolve to a closer relationship. If shareholders agree to approve the deal, expect more companies who wish to be in cannabis field to use the Canopy and Acreage agreement as a model.
Linking to dividend paying stocks, no cannabis stock pays a dividend, most operate in a deficit and expect high growth in the future as the legal market changes. When there is potential, sometimes it is best to wait for the best in breed to lead the pack and then you can invest when you wish to.
There are more questions than answers, till the next time – to raising questions.