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Canada Legalizes Marijuana: Stocks & ETF in Focus

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Canada is now the first major world economy and the second country after Uruguay to legalize recreational marijuana. Medical use of marijuana has been legal in the country since 2001.

Shares of many cannabis companies, including Tilray (TLRY - Free Report) , Canopy Growth (CGC - Free Report) , Cronos (CRON - Free Report) , Aurora Cannabis and GW Pharmaceuticals (GWPH), which have been souring over the past few months, are trading down today.

The emerging pot industry is growing fast and gaining legitimacy. Per research firm Euromonitor, the American market for legal marijuana products will reach $20 billion by 2020, up from $5.4 billion in 2015.

Many beverage giants are investing or planning to invest in cannabis. Coca-Cola (KO) is reported to be in talks with Canada’s Aurora Cannabis to develop cannabidiol infused beverages. Cannabidiol is a non-psychoactive substance in marijuana that is known to have some health benefits.

Recently Constellation Brands (STZ - Free Report) , invested $4 billion in Canopy Growth (CGC - Free Report) , raising its stake to 38%.

Investors should remember that cannabis remains illegal at the federal level in the US while 30 states and the District of Columbia having legalized the use of the drug for medicinal or recreational use.

Further, marijuana stocks are extremely volatile.  These are younger and risker companies in an industry that continues to evolve.

The ETFMG Alternative Harvest ETF (MJ - Free Report) --the first and only pure play US listed ETF targeting the cannabis industry--holds 37 companies that are involved in legal cultivation, production, marketing or distribution of cannabis or related products.

I talked with Jason Wilson, president of Budding Equity Asset Management in Canada and partner in MJ, in a recent podcast.

Please listen to the podcast to learn more about the outlook for pot stocks and MJ ETF.

Marijuana Stocks and ETF: What Investors Need to Know

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