Marijuana News Today
The marijuana news today has us looking at the big investments hitting the marijuana industry and their transformation from interest-based loans to equity investments.
According to a recent report, equity investments by cannabis investors now make up 78% of buys happening in the industry, up from 61% in 2017. Loan-based investments, meanwhile, have shrunk to 22% from 38% two years ago. (Source: “Chart: Cannabis investors shift from loan financing to equity investment,” Marijuana Business Daily, July 30, 2019.)
So what does this mean for general investors? After all, your average mom-and-pop investor cannot hope to dole out loans to the tune of hundreds of millions of dollars.
Instead, the importance for you, dear reader, is that this once again shows that attitudes are changing around the marijuana industry.
Loans offer a great way to net steady, dependable returns (there’s a reason banks are worth hundreds of billions of dollars). But the thing is that loans are a known quantity; what you’ll get is predetermined and set out in ink. There’s no chance for some massive surge in profits.
Equity, on the other hand, has the ability to exponentially grow your investment—at the cost of increased risk. A loan, for instance, is very likely to be paid off save a few dramatic occurrences. Equity, conversely, offers no such guarantee.
The fact that more investors are reaching out to cannabis companies in an effort to acquire equity, then, speaks to the growing confidence and excitement building around the pot industry.
Gone are the days when many viewed pot stocks as simply too speculative and volatile to be appropriate long-term investments by larger players. Instead, we have a number of cannabis investors keen on getting equity that has the chance to double or triple their investment in a span of a year or two.
The cannabis industry, then, is maturing before our very eyes and entering the next phase of its development: high growth and lower risk as it attains legitimacy and solidifies as a global market.
That’s still many years away, with a whole lot of political battling in store for pot. Which means that equity investors still have many years of growth ahead of them; larger players are betting on it, as evidenced by their increasing interest in pot stocks.
It’s also worth noting just how successful that cannabis companies have been in their efforts to bring on investors. Data from Viridian Capital Advisors shows that North American cannabis companies raised $6.1 billion in equity and $2.4 billion in debt through 369 transactions through July 2019. (Source: Ibid.)
That speaks to the massive influx of capital flowing into the market that is only going to help spur further growth among marijuana stocks.
It was a tough one on the pot stock market yesterday, but the marijuana news today as it pertains to pot shares is far more positive, with most stocks remaining flat while a few have surged.
One particular gem worth of note today is Aphria Inc (NYSE:APHA). APHA stock surged 5.5% in early morning trading, while over the past five days has fallen over eight percent.
Still, the reason behind the company’s movement today is promising: Aphria’s subsidiary Marigold Projects Jamaica Limited has received a retail Herb House licence from Jamaica’s Cannabis Licensing Authority to open its first store in Kingston, Jamaica. The location will also allow for on-site consumption. (Source: “Aphria Inc.’s Jamaican Subsidiary, Marigold, Receives Retail Herb House Licence,” Aphria Inc, July 29, 2019.)
While a single pot shop in Jamaica isn’t exactly going to set profits on fire, the idea here is that global expansion is underway at Aphria, something that marijuana investors and analysts like myself have long valued.
If this is the first of many locations in Jamaica—and around the world—to open for Aphria, we could be looking at a global force in marijuana for years to come, which will be reflected in the company’s share prices.
“We believe that there is tremendous opportunity in Jamaica from a domestic and international perspective,” said interim-CEO Irwin D. Simon.
Receiving this licence is testament to our team’s hard work and dedication in growing our Caribbean and LATAM business as we provide high-quality cannabis products in regions. Aphria will continue to execute on our business plan to create long-term value, sales growth, and profitably in Canada and internationally.
The Marigold cultivation farm is fully operational, with inventory exceeding 2,700 kg upon opening of the store. The company maintains an additional 20 acres of vacant land in anticipation of expanding its cultivation operations, as well as a 10-acre farm in St Catherine. (Source: Ibid.).
APHA stock has had a long, difficult journey since it was the target of a short-seller attack that led to legal troubles surrounding its LATAM investments, among other problems.
It has yet to fully recover and is down about 30% over the past year, but for speculative investors, Aphria Inc does offer the possibility of big gains as it hopes to regain its former glory. This move in Jamaica is a strong step in that direction.
Another positive story on the marijuana stock market today comes by way of Tilray Inc (NASDAQ:TLRY). TLRY stock gained 1.5% in early morning trading, and finds itself down about three percent over the past five days.
The most positive thing about Tilray today, however, is that the company has once again crossed the $40.00 threshold.
There was long speculation about how high Tilray stock ought to be valued. Once having crested triple digits, the company descended into a long and drawn out pullback as investors had the IPO-tinted glasses removed. With that glitter and excitement gone, the company appeared to be grossly overvalued to many, which precipitated its descent.
Now, however, it appears that Tilray stock has finally found its landing spot: $40.00 per share. It has held here for a few months now and appears to be standing pat.
That’s a good sign. It means that the long fall is likely over and now TLRY stock can once again begin making sustained, long-lasting gains from a place of stability.
While TLRY stock will have to make some big moves in order to generate massive growth, at the very least investors can be confident that the future is likely to be looking up for TLRY stock.
APHA and TLRY Stock Performances
The performances of APHA stock (black line) and TLRY stock (blue line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The marijuana news today has us seeing yet another sign of a maturing marijuana industry.
Equity investment outpacing loan investment means that those with a lot of money to spend see more value in betting on pot stock growth, rather than the much stabler but less exciting avenue of interest-based loans.
On the marijuana stock market, we’re seeing a recovery from yesterday, with Aphria Inc being among the best performers as the company expands internationally.