Is the Cannabis index set to light up?
The cannabis industry saw mainstream growth in 2018 when Canada legalised its recreational use. Wider decriminalisation by more countries have led experts to believe the industry could be worth $102 billion by 2026.
However, the impact of Covid-19 has stalled the cannabis industry’s trajectory. Cannabis company stocks fell by 72% in 2022, despite legalisation across more US states. In December 2022, President Joe Biden called for agencies to reconsider whether cannabis should be reclassified under federal law.
Recovery for cannabis stocks remains uncertain in the face of high inflation, but the market consensus could swiftly change if the US Congress decriminalises the drug.
Quick facts on the Cannabis index
The Cannabis index is comprised of the top 20 cannabis stocks weighted by market capitalisation and is revised quarterly on the third Friday of every March, June, September and December after market close.
The impact of cannabis legality
Cannabis remains federally illegal in the United States, but some states have started permitting marijuana for medical and recreational use in recent years.
In Canada, recreational cannabis use was federally legalised in 2018, allowing several legitimate marajuina companies to fly high – many of which went public.
Typically, Canadian stocks are the best way for traders to gain exposure to the global expansion of legal marijuana, a market that some experts to grow by 18% year-on-year through to 2027.
Our team of analysts keep an eye out for cannabis stock movements, so be sure to stay abreast of the news.
How to trade the Cannabis index
Many commentators say cannabis stocks look expensive by traditional metrics. Few are consistently profitable and with some it’s too early to tell if they will be. Traders taking those views to heart may wish to sell or go short on the Cannabis index.
On the other hand, you can buy or go long in cannabis if you think there are enough factors in play to drive strong growth at the top end of the market. The Biden administration is thought to be relatively open to the concept of wider relaxation in cannabis laws.
As with all our other trading instruments, our Cannabis index charts are easily accessible on any device, and come with technical indicators and drawing tools as standard.