Most investors are taking this all the wrong way.
They’re going to miss out big time as a result.
A major marijuana merger has shocked the legal marijuana industry.
This week WeedMD (CSE: WMD, OTCBB: WDDMF) and Hiku Brands (CSE: HIKU, OTCBB: DJACF) declared they would be joining forces.
The deal makes a good bit of sense for both companies.
WeedMD was primarily a medicinal marijuana company. It’s a fully-licensed marijuana producer and focused on building a customer base of medicinal marijuana customers.
Hiku Brands, in exchange, gets access to a licensed marijuana production facilities to grow it’s branded marijuana strains.
The market’s reaction to the news revealed so much to investors paying close attention though.
After the announcement Hiku Brands shares fell 6% and WeedMD shares soared 25%.
The market reaction is the absolute critical part of all this.
Canada’s medicinal marijuana market (which requires customers to prove a need for medicinal marijuana and get a prescription from a doctor) will likely grow to around $1 billion in the next few years.
Canada’s recreational use market (which any customer of age can walk in off the street and buy whatever they want) has the potential to grow to $7 billion, eventually surpassing tobacco and liquor sales, over the next few years.
Consider the deal gives WeedMD ready access to recreational use marijuana market, it’s no surprise it’s shares soared on the news.
If you’re an investor, do you want the company fighting over market share in a more mature $1 billion market or a brand new market that’s going to grow to $7 billion?
The answer should be an easy one and any investor considering marijuana stocks should invest accordingly if they really want to make the most out of their marijuana investments.
The Seed Investor