Following the legalization of cannabis in North America, many companies in Canada came into prominence among investors and one of those was Hexo (HEXO:NYSE). The company boasted of being one of the bigger operators in Canada and had access to the United States market as well through its partnership with Molson Coors. Those factors did not help the stock much and in recent times it has performed unimpressively.
Cannabis Investment
It was believed that the coronavirus pandemic, the lockdowns, and the associated stress was going to lead to a surge in cannabis sales. However, that did not come to pass and many Hexo investors were left frustrated.
That being said, the Hexo stock gained between 1st and 26th October. In light of such gains, it is pertinent to wonder if it could be a worthwhile cannabis investment.
While it is true that the cannabis sector can be highly volatile, it is also true that it can be considered a high risk-high reward segment and Hexo could well be the stock to track in that regard.
However, there is uncertainty ahead owing to the Presidential elections and potential recovery. Hence, it is important for investors to have a look at the immediate factors that could help in boosting Hexo’s operations.
Beverage and CBD Pathway
Hexo is involved with Molson Coors in the joint venture Truss Beverages, which is engaged in creating CBD laced beverages. It may not have helped the stock this year, but it could in the future considering the fact that Truss gives Hexo a path into the lucrative American market.
CBD has gained considerable traction among American consumers and according to a poll from 2019, as many as 14% of the population revealed that they consumed CBD products.
Possibilities
14% may not be a lot but there is a promise for further growth as economic uncertainties and the possibility of a second wave of coronavirus infections make people more agitated.
On the other hand, the stigma associated with CBD consumption is also expected to be a thing of the past as more and more people get stressed due to the prevailing situation.
The products from Truss Beverages could also be a major factor in changing attitudes since people are expected to take to a beverage more easily than a vaping product. However, it is also necessary to keep in mind that the risks with the company are not going to go away, and hence, investors should be cautious.
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