This dominant marijuana stock has a strategy (not very serious) to succeed – Motley's crazy

2019 has been a good year for marijuana stocks up to now and cannabis companies are seeing strong growth. The opening of the Canadian market for recreational cannabis has been a landmark event for dozens of companies looking for a position in the fledgling industry, and investors have been trying to predict which actors on the ground would be most likely to be successful in the long term.

Late last week, Cover growth (NYSE: CGC) has released its latest quarterly results and investors have been excited to learn about all the initiatives taken by the company for the future. Co-CEO Bruce Linton and his management team made a number of promising remarks about the company's direction, and outlined parts of their strategy for what will be in the near future.

1. The location of retail stores is a key element of Canopy's growth

The most active sales pitches are not directly related to the number of people in the province. This is strongly related to places that have shops. … We have trained more than 600 people working in the cannabis sector as salespeople with a training program at their own pace, which means that the incoming client is much more informed.

– Bruce Linton, CEO

Marijuana investors have the feeling that customers have been waiting for so long to obtain legal cannabis that they already know exactly what they want. But this is not really the case and many people need help determining which cannabis-based products best meet their needs. Mr. Linton understands that it is essential to have smart sellers in retail stores to demonstrate the benefits of Canopy brands on the competition. In addition, as new products such as cannabis derived oils become more popular, customers will have the opportunity to visit retail stores and get help. to be more and more crucial.

2. Value-Added Products Will Help Differentiate Canopy

Management continues to [believe] significant demand will develop for cannabis oil and in particular softgels in the leisure market. As such, the company continues to increase its stocks of quality dried cannabis extracted and held for conversion and to increase the amount of cannabis oil and Softgel capsules we have on hand.

– CFO Tim Saunders

Canopy has worked hard to increase its ability to produce dried cannabis, but in many ways this part of the market is likely to become a commodity over time. As a result, Canopy is looking for ways to differentiate itself from its competitors and is focusing on the use of specialty products such as cannabis derived oils and softgel capsules, already in high demand by consumers. This is a good long term strategy for the company. This, combined with the subsequent development of brands such as Tweed and Tokyo Smoke, will be important to Canopy's ability to maintain and grow its market share.

3. Despite the legalization of hemp, the US market is far from homogeneous

We will be traveling to New York State largely because of the regulatory framework put in place by the State of New York. … Maybe the state of New York will be a great market, maybe California will be more difficult, and it is more regulation.

– Linton

The recently passed US Bill, Farm Bill, legalized hemp products and Canopy Growth immediately made a strategic decision to strengthen US hemp production capacity by announcing plans to build a facility in northern New York. the state of New York. Mr. Linton envisions several park-size hemp production facilities in several key states, with the hope that they will eventually facilitate the transition to the creation of outlets offering hemp base to customers in these regions.

4. Latin America will be important

Our activities in Latin America did not have as much visibility because we were eligible to keep them a little quiet. But this group now has about 70 people operating in four countries and whose production assets are already well advanced in construction, which will begin to appear as a reality, both active and yielding, for the rest of the world. ;year.

– Linton

Most cannabis investors focused almost exclusively on Canada and the United States, with some top brands in parts of Europe where medical marijuana was gaining momentum. But Linton sees Canopy Growth as global in scope and is present in regions like Latin America – where other players in the marijuana market have not really paid much attention – could be a key element of creating a truly global brand.

5. Canopy does not want its competitors to steal its secrets

These are all excellent questions, and I must think that if I give a very clear and complete answer, it would be advantageous for the parties that we are not here to help.

– Linton

Investors want details on Canopy's products, retail channels and pathways to greater US penetration, but they also need to understand that the more the company unveils its strategy, the easier it will be for competitors to track it. . Canopy has a huge first-mover advantage, but that does not mean that it can be completely transparent. It's a balanced exercise for any publicly traded company, but Canopy has done a good job to date by providing useful information without revealing it.

Canopy wants more growth

Canopy Growth is not the only major player in cannabis, but it wants to maintain its leading position in the market. With so much in-house support and from key partners, Canopy has the potential to stay ahead of the pack as a pioneer of marijuana for a long time.

Dan Caplinger has no position in the mentioned actions. The Motley Fool has no position in any of the actions mentioned. Motley Fool has a disclosure policy.