Marijuana News Today: Canopy Growth Hungrily Eyes U.S. Market

Marijuana News Today
iStock.com/fortton

Marijuana News Today

With the marijuana stock market falling, many pot enthusiasts are on the lookout for the next big breakthrough. In the marijuana news today we have Canopy Growth Corp (NYSE:CGC) eagerly awaiting federal marijuana reform in the U.S. so it can pounce on what will be the biggest event in the industry to date.

U.S. marijuana legalization is coming. That’s not conjecture anymore, but merely a fact. Where the conjecture comes in, however, is the timing.

With the current conservative government in control of the presidency and the Senate, there’s a slim hope that marijuana reform will be passed in the near future.

But looking at the long-term situation, the Democratic Party is looking to make marijuana reform one of its main policy pillars—and for good reason.

Advertisement

Prime Minister Justin Trudeau in Canada did the same thing in 2015 when he ran for election, and the move helped propel him into power. Liberals in the U.S. would be wise to take heed.

In the meantime, marijuana companies are still eyeing the U.S. market, biding their time until they can invest in what will almost certainly be the most lucrative pot market in the world.

One of those companies is Canopy Growth, which has invested heavily in an investment company in order to be among the first investors in U.S. marijuana.

Canopy Rivers Inc (OTCMKTS:CNPOF, CVE:RIV) first went public a couple of months ago.

Chart courtesy of StockCharts.com

The company is heavily focused on the U.S. pot market, excitedly searching out different ways to invest in the untapped goldmine that is American pot.

Co-founded by Sean McNulty and Peter Hatziioannou, the company is hoping to be among the first investors in U.S. pot should federal regulations change.

At the moment, the Toronto Stock Exchange (TSE) requires that a company comply with federal laws in the jurisdiction where they operate in order to maintain its listing. As such, investment in the U.S. marijuana market is forbidden.

Canopy Rivers says that regulatory reform is already underway, however, and they are keeping tabs on potential U.S. opportunities through XIB Consulting Inc., their outside consulting firm.

“If Canopy Rivers could invest its own capital into the States, you would see one or both of us go all in on Canopy Rivers,” McNulty said in an interview with Bloomberg.

Because it can’t just yet, the company keeps itself “very plugged into other ideas, competitors and opportunities” through XIB, he added. (Source: “Canopy VC arm ready to pounce if U.S. legalizes marijuana,” Bloomberg, November 19, 2018.)

Canopy Growth owns about a quarter of Canopy Rivers, meaning that it will be among the first to be able to invest in the U.S. pot market once it does open up, meaning that, as always, Canopy Growth stock is eyeing future developments in the market.

Having said that, both Canopy Growth and Canopy Rivers have followed similar market trajectories since Canopy Rivers went public, with both being shellacked over the past few weeks during the market downturn.

CGC Stock

Speaking of a shellacking, CGC stock once again finds itself down big.

The company fell by about seven percent in morning trading. Over the past five days, the company has dropped 16%.

Much of this is due to the combination of a weaker-than-expected quarterly report alongside the general malaise affecting the market as a whole.

The marijuana industry continues to fall during this correction, a response to the massive jump in August and the lack of hype in the absence of Canadian marijuana legalization to look forward to.

CGC stock saw its losses increase substantially in the latest earnings report, something that is not unexpected for a company looking to grow. But it did alienate investors with those numbers, putting CGC stock on the back foot.

While I’m still big on CGC stock—especially considering its careful consideration of the U.S. marijuana market—the company will likely be in the dumps until this correction subsides and gains can once again reign.

CRON Stock

Another major stock that is down to start the week is Cronos Group Inc (NASDAQ:CRON).

CRON stock has, for the most part, fared better than its direct competitors, able to mitigate its losses and perform at a relatively stable clip.

Still, the marijuana industry pullback is affecting CRON stock as well, with the company falling about four percent in early trading and about two percent over the past five days.

One of the positives for CRON stock, however, is that the Nasdaq appears to be the better listing compared to the New York Stock Exchange (NYSE) during this particular correction.

Both CRON and Tilray Inc (NASDAQ:TLRY) have performed better than their competitors listed elsewhere. While this is not a trend I imagine will hold true through other corrections, at least in this current investment climate, the Nasdaq is the kinder exchange at the moment.

This is likely motivated by a larger swath of investors on the Nasdaq who see the correction as an opportunity to reinvest in the marijuana industry at a discount…which it very much is.

HYYDF Stock

The final company we’ll be looking at today is Hexo Corp (OTCMKTS:HYYDF, TSE:HEXO).

Despite being one of my favorite marijuana stocks, Hexo stock is not immune to the marijuana correction.

Hexo stock is down about six percent in trading to start the week, and down two percent over the past five days.

Being a marijuana penny stock has so far played out in its favor during this correction, mitigating some of the losses.

Hexo stock also has its future NYSE listing to look forward to, scheduled for December. If the marijuana correction abates in the next few weeks (which I am doubtful will happen, but it is possible) then the NYSE listing will help boost Hexo stock significantly.

Hexo stock, as I’ve said on multiple occasions, is a stock full of potential due to its price, but investors will have to wait until this correction ends before they’ll reap the benefits of an investment into HYYDF stock.

CGC, CRON, and HYYDF Stock Performances

The CGC stock (black line), CRON stock (blue line), and HYYDF stock (red line) performances from the past week are seen on the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today is heartening, if not immediately beneficial for investors.

Marijuana companies have their eyes firmly set on the future growth in the industry, which is great. The problem is that we still have to stare down this mean correction before we’ll get to those coming gains.

While the correction is likely to last several more weeks at least, as always, there will be gains at the other side for those willing to wait out the storm.