Marijuana News Today: Branding Restrictions Could Hurt Stock Prices, Aphria Acquisition in Latin America

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Marijuana News Today

In the marijuana news today is the possibility that branding restrictions on the marijuana industry by Health Canada could negatively impact marijuana stock sales and future value.

The problem is that Canada, while being the most weed-friendly country in the developed world, by no means holds unconditional love for the drug.

Several restrictions are being put in place to limit how marijuana companies can market and brand their goods. The Canadian government doesn’t want these products of vice to be too appealing, especially to youngsters.

Canada’s restrictions state that product packaging needs to be uniform and singular in color, standardized in font style, and contain no images or graphics—aside from a logo. The packaging is also banned from showing the price, quality, performance, or effects of the product. (Source: “Restrictions On Packaging & Branding Could Hamper Canadian Cannabis Producer Canopy Growth’s Sales,” Forbes, July 17, 2018.)

Basically, Health Canada wants these packages to be as bland as possible.

Other typical marketing tools like celebrity endorsements or mascots are banned. Considering the number of high-profile marijuana advocates there are (think Willie Nelson, Snoop Dogg, Bill Maher, etc.) that last restriction may be particularly damaging.

On top of the restrictions on advertising, these products will be forced to carry a bright yellow health warning.

These restrictions are, of course, not without precedent; the tobacco industry has for years been regulated in a similar way.

The issue when it comes to marijuana, however, is that the industry views itself more like alcohol than cigarettes. Beer, wine, and liquor makers are free to advertise in a number of ways that tobacco companies are not, including the use of eye-catching packaging and flashy commercials with celebrities and fictional characters (think the “Most Interesting Man in the World” campaign for a certain beer brand).

The upshot is that these bland packaging rules may lead to a slowdown in sales, which would lead to lower stock prices.

It’s not an ideal situation for the marijuana industry, and it’s one that is being fought. But I doubt that weed companies will be able to win this battle. It appears that they’ll have to grin and bear it.

While this by no means will break marijuana stocks (and was already factored in by most analysts), the flip side is that, if the restrictions are eventually reversed, that would be a significant boon to the pot industry.

Aphria Stock News

The marijuana news today on the pot stock market is again one of disappointment as weed stocks are largely down sector-wide.

One marijuana stock that has suffered more than most in 2018 continues to nosedive: Aphria Inc (OTCMKTS:APHQF, TSE:APH).

Compared to the beginning of last week, Aphria stock is down 12%.

That’s in keeping with a number of other big-name marijuana stocks, sure enough. But what makes Aphria stock’s performance particularly upsetting is that its price is now down by over 46% on the year.

Chart courtesy of StockCharts.com

While marijuana bulls like myself keep expecting Aphria stock to hit a low point from which it can stage a measured comeback, it doesn’t appear to have happened yet.

While the stock has had a few runs here and there in 2018, by and large, it has been one of the weakest performers in the legal marijuana industry.

And to make matters worse, recent good news isn’t even cutting it for the company.

Aphria has been linked to a Molson Coors Brewing Co (NYSE:TAP) deal that would see the two companies work together to brew marijuana-infused beverages.

While just in the rumor stage, the potential deal should be at least generating a little bit of buzz around Aphria stock. Instead, we’re seeing another week of heavy losses for the stock.

Aphria is also involved in a South American and Central American deal worth about CA$200.0 million. (Source: “Aphria announces proposed acquisitions in Latin America, Jamaica worth around $200 million,Financial Post, July 17, 2018.)

The three assets are based in Colombia, Argentina, and Jamaica and are held by LATAM Holdings Inc. They are to be acquired by Scythian Biosciences (OTCMKTS:SCCYF), an Aphria subsidiary.

But none of this has been enough to power Aphria stock to a recovery.

Cronos Stock News

On the other end of the spectrum, we have Cronos Group Inc (NASDAQ:CRON).

While having a fairly disappointing year on the whole (primarily due to high expectations rather than poor performance), CRON stock has proven to be one of the more solid picks in recent weeks.

While other marijuana stocks have been plummeting, Cronos stock has been remaining firm. It saw little to no movement over the past week, which is just fine, considering that the cannabis industry largely underwent a double-digit pullback.

CRON stock appears to be one of the more stable investments at this moment, and it is weathering the industry pullback well. Cronos stock has always been a bit of a maverick in the marijuana industry, and I like the idea of some exposure to the company as a hedge of sorts.

Analyst Take

The Canadian marijuana branding laws aren’t going to crush the industry by any means, but they could stifle growth. While not dooming, it is an unnecessary impediment to marijuana sales and stock value that we’d rather not see.

Meanwhile, on the marijuana stock market, we have an industry in a downturn, with several pot stocks suffering. I see this setback continuing for a few weeks yet, but it will end the closer we get to Canadian legalization.