Marijuana News Today
In the marijuana news today, Molson Coors Brewing Co (NYSE:TAP) is making headlines due to its interest in expanding into the pot sector with cannabis-infused beverages, specifically looking to get the product out in Canada where marijuana is soon to be legalized on a federal level.
Unnamed sources speaking with Bloomberg said that the move is likely being made in order to offset declining beer sales, which are projected to only fall further in markets like Canada, where marijuana is about to be legalized. (Source: “Molson Coors said to be in talks with marijuana companies about infused beverages,” Financial Post, June 25, 2018.)
The report stated that Coors has been in talks with as many as four Canadian pot stock companies—including industry heavyweights Aphria Inc (OTCMKTS:APHQF, TSE:APH) and Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB)—about getting its pot-infused drinks to the market.
“We have assembled a team in Canada to actively explore the risks and opportunities of entering the cannabis space in that market, where it will be federally legal by this fall,” Chief Executive Officer Mark Hunter said at an investor presentation on June 6.
The move is a bit premature in that cannabis edibles and beverages are not yet legal in Canada, but the consensus is that Canada will legalize these products in fairly short order. That leaves a potentially untapped market (pardon the pun), with many companies hungrily eyeing a potentially very lucrative market.
“We’ve said specifically we’re interested in the infused beverage space and we do intend to enter that market,” Aurora Cannabis’ Chief Corporate Officer Cam Battley said by phone to Bloomberg on June 22. (Source: Ibid.)
The edible and marijuana consumables market is one of the more exciting ones for prospective investors. While there is heavy saturation in more traditional marijuana products, a June 5 report from Deloitte claims that six in 10 consumers will likely choose to consume edible cannabis products versus smoking.
With those kinds of numbers in tow, companies are chomping at the bit to get a stake in this very exciting sub-sector.
Coors is also hardly the first Big Alcohol company to get involved in marijuana. Headlines were made last year when Constellation Brands, Inc. (NYSE:STZ) invested in Canopy Growth Corp (NYSE:CGC).
The appeal to alcohol sellers is evident; marijuana is likely to offset at least some alcohol sales as consumers exchange one vice for another.
In order to help make up for that decline in sales, beer sellers are going to want to find a way to gain exposure to the growing marijuana market. It’s a seemingly perfect fit.
The big benefit for marijuana stocks, however, is that they are gaining access to a whole field of immense capital.
While retail investors are the ones primarily powering the industry, institutional investors with their hundreds of millions—sometimes billions—of dollars have been more reluctant to get in on the business due to the differences in laws across country and state lines.
With alcohol companies partnering with marijuana companies, however, you have an industry that is somewhat starved for big investors gaining access to a whole flock of multi-billion-dollar companies with money to spend.
CGC Stock News
Aside from the positive tidings by way of Coors, in the marijuana news today we’re seeing gravity rear its ugly head yet again.
Marijuana stocks fell to close out last week, putting a damper on some of the gains made following the announcement of the Canadian marijuana legalization date.
Chart courtesy of StockCharts.com
Canopy Growth stock finished last week with about 10% gains, which is, of course, great to see, but that comes after a 10% fall on Friday cutting its weekly progress in half.
This was not unexpected. In fact, it’s very much par for the course when dealing with the marijuana industry: strong intense gains followed by immediate corrections.
It’s simply something you have to account for when dealing in an exciting emerging market.
That said, CGC stock is still one of the top performers on the year and continues to impress. While the industry is at risk of a tumultuous time ahead characterized by rapid growth and equally swift pullbacks, Canopy Growth stock is still one of the companies most likely to come out with healthy gains when all is said and done.
Aurora Cannabis Stock News
Mentioned above as one of the potential partners with Coors, Aurora Cannabis stock also finished last week up about 10%, although at one point the company’s stock rose by as much as 14%.
The situation for ACBFF stock is very similar to that of Canopy, in that both are juggernauts in the industry and therefore are often some of the more stable ships in a stormy marijuana market.
Volatility comes with the territory in this industry—it’s partly why investors are able to make such fantastic gains, after all—but for investors looking to anchor themselves to more reliable stocks, CGC stock and Aurora Cannabis stock offer some of the better long-term prospects.
Of course, a Coors partnership could go a long way toward helping boost ACBFF stock in the long run.
Considering how aggressive Aurora has been in 2018 in getting deals done, mostly acquisitions, I would put it as the favorite to land the Coors deal should the beer maker follow through with this plan.
Aphria Stock News
Aphria stock, the other company mentioned in the Bloomberg report, is the less likely of the two to land the deal, if I were to place a bet.
Aphria stock has been subject to one of the harsher rides in 2018 as far as marijuana stocks are concerned, with the company’s lows during the correction being deeper than most while its highs have been relatively muted.
Even in the rush we saw last week, with gains made across the industry, Aphria stock only managed gains of about eight percent, putting it behind its closest rivals.
Of course, eight percent is nothing to scoff at, but the company has been one of the weaker performers on the year and there’s little evidence yet bucking that trend.
The infusion of cash by way of alcohol companies is going to be a big win for marijuana stocks—or at least, the marijuana stocks lucky enough to land those deals.
The industry is in need of more well-moneyed investors and that’s something that Big Alcohol can provide.
While the specifics of what such a deal would look like are still unknown, the pot stock that is able to land such a deal will likely be headed for a good bit of stock gains.