Marijuana News Today: Colorado Pot Sales Impress, Marijuana Stocks Rise

Marijuana News Today
iStock.com/BruceStanfield

Marijuana News Today

The marijuana news today has some good news coming our way via the Rockies, while the pot stock market saw gains across the board.

Colorado marijuana sales have surpassed $6.0 billion since the state legalized pot back in 2014, while taxes generated by the weed industry grew nearly eight percent last year, according to a report by the state. (Source: “Colorado legal pot industry sales grew 3 percent in 2018, top $6 billion since recreational use began,” CNBC, February 12, 2019.)

2018 saw continued growth in the Colorado marijuana market, with the Colorado Department of Revenue saying that sales climbed by about three percent year-over-year to more than $1.5 billion. Sales have more than doubled since 2014, when they came in at $683.5 million.

Even better for marijuana supporters, tax revenue from the weed industry has proven to be a lucrative revenue source for the government, hitting $266.5 million in 2018—up almost eight percent from 2017. Colorado has pulled in almost $1.0 billion from pot tax revenue since 2014.

Advertisement

Colorado is one of the better examples of a well-maintained and operated legalized marijuana industry. The growth and strong sales speak to a mature market (after all, it’s been legal for five years).

Colorado looks especially impressive when compared to California, which has seen its sales come in below expectations.

California, in its first year of legalization, has struggled with onerous taxes and an illicit market that forced marijuana tax revenue in the first six months of 2018 to come in $101.0 million below estimates.

While the state is looking for solutions to the problem, like tax breaks for the pot sector, the overall message is that the government and its policies are still heavy factors when it comes to how marijuana sales—and, by extension, marijuana stocks—fare in the nascent days of the legal trade.

But most heartening for marijuana bulls is that Colorado has fared so well.

If we take Colorado as a best-case scenario, the relatively small state shows just how much potential there is in the marijuana market at large.

For instance, Toronto, Canada is a city that’s bigger than the entire state of Colorado. As the marijuana industry continues to mature in Canada, we should expect to see sales—and pot stocks—climb.

While the industry is still figuring things out in these early days, the takeaway is that Colorado shows just how much promise there is in the marijuana industry when it’s well run and well operated. Hopefully, Canada, California, and other larger markets will catch up sooner rather than later.

CGC Stock

The marijuana news today on the pot stock market was pretty positive overall, with many shares seeing healthy climbs to start the day.

One of those winners was Canopy Growth Corp (NYSE:CGC).

CGC stock jumped three percent to start the day. This is a nice change of pace for the week, as it has fallen about three percent over the past five days.

Overall, this is to be expected after the raucous January that the industry experienced.

We welcomed 2019 with massive gains across the industry. The market response is now either to consolidate those gains with smaller moves up and down or to correct. Seeing as how the latter is far worse than the former, we’ll take a few weeks of small hits or lesser gains.

But Canopy Growth Corp is in a very special position: tomorrow it is set to release its latest quarterly report.

I’ve written extensively now on how important these quarterly reports are moving forward for marijuana stocks. CGC stock is no exception.

The question is: should anyone invest now, ahead of the numbers releasing?

I think that it’s a risky move, but one that I believe will pay off.

The last quarterly report out of Canopy disappointed, so there is a chance that we’ll see a drop in share prices tomorrow.

But considering how positive the industry has been on other recent quarterly releases, and with sales numbers likely to jump due to Canadian marijuana legalization, I anticipate that we’ll see strong gains tomorrow out of CGC stock.

It’s by no means a guarantee, but for those looking for a quick jump and who don’t mind rolling the dice a little, Canopy Growth Corp is your play.

CRON Stock

It’s hard to find a better performer in 2019 so far than Cronos Group Inc (NASDAQ:CRON).

Cronos stock climbed over two percent in early-morning trading today and is one of the few winners of the past five days, up two percent.

CRON stock also came out of the gate this year on a blistering rush, showing 91% gains year-to-date.

Cronos is now one of the premier marijuana stocks (in my estimation, anyway), primarily due to its “Big Tobacco” partnership with Altria Group Inc (NYSE:MO).

This deal helped propel it from being about “potential” to becoming the real deal.

Cronos Group Inc, meanwhile, also has a quarterly report set to land in the coming weeks. This puts investors in a strong position to reap big gains.

Like Canopy Growth and other pot companies before it, the quarterly reports coming out now are likely to show huge revenue boosts due to Canadian marijuana legalization, meaning we could see rapid growth in their wake.

As such, investing in CRON stock now could be a way to turn big profits in a short amount of time.

It is a risk, however, because quarterly reports have disappointed in the past. But I’d say that it’s more likely than not that the numbers are strong and push shares higher.

APHA Stock

One of the big winners to start the day was Aphria Inc (NYSE:APHA).

Aphria stock gained four percent in early-morning trading today, but finds itself down 3.5% over the past five days.

Now, I haven’t been a fan of APHA stock for some time, and for good reason.

There was the legal scandal in 2018 where short-sellers accused Aphria of buying assets to boost personal wealth rather than the company’s portfolio.

While a third-party investigator came out today and said that this charge was inaccurate, it is still a contentious issue. (Source: “Aphria-related short seller report ‘inaccurate,’ third-party investigator finds,” Financial Post, February 13, 2019.)

In any case, having these types of volatile legal situations surrounding is not ideal. Furthermore, APHA stock has failed time and again to separate itself from the pack in 2018.

As such, I’d still be wary of getting back in on Aphria Inc.

CGC, APHA, and CRON Stock Performances

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

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today has us seeing green in Colorado with its healthy example of a well-run legalized marijuana industry.

As time goes on, expect others to emulate the state and see stock prices boosted as a result.

In the marijuana stock market, we’re seeing a healthy rally with quarterly reports set to be released and send stock prices soaring.