Although the cannabis industry is expected to eventually achieve decriminalization in the U.S. at the Federal level, several challenges, including restricted access to capital and associated health risks, could impede its growth. Considering this, we believe investors are better off avoiding for now fundamentally weak cannabis stocks Curaleaf (CURLF), Canopy Growth (NASDAQ:CGC), and Grow Generation (GRWG). These stocks have also been downgraded recently by analysts. Read on.Although the U.S. cannabis industry has been gaining steam, in-part due to the hopes around a Republican-led legalization effort, the health risks associated with the use of marijuana and its strong addiction in adolescents could curb the industry’s growth. Despite marijuana becoming mainstream in many states, it remains a thorny issue because growing cannabis is a federal crime that transgresses the Controlled Substances Act.
Furthermore, with the laws around cannabis becoming gradually more favorable, more players are entering the cannabis space, making the industry highly competitive. This trend could negatively impact the market share of existing players.
Given this backdrop, we think it could be wise to steer clear of cannabis stocks Curaleaf Holdings, Inc. (OTC:CURLF), Canopy Growth Corporation (CGC), and GrowGeneration Corp. (NASDAQ:GRWG). The companies possess weak fundamentals, and analysts have recently downgraded these stocks.