Marijuana News Today
Other than the fact that it’s Friday, there’s not a whole lot to be happy about in the marijuana news today.
In the pot stock market, we have massive pullbacks, with Tilray Inc (NASDAQ:TLRY) leading the way, down 13% in pre-market trading. On the political side, we have border agents who will now ban Canadians who invest, use, or work in the marijuana sector from entering the country—potentially for life.
First, let’s get to the politics.
U.S. Customs and Border Protection is imposing harsher regulations on the marijuana industry with a new policy. While marijuana use had always been banned by the federal agency (and therefore grounds for denial of entry), the inclusion of investors and those working in the marijuana industry is a step further. (Source: “U.S. official: Canadian marijuana users, workers and investors risk lifetime border ban,” Politico, September 13, 2018.)
This is especially complicated for the U.S.-Canada border, which sees millions of people cross it every year. A traveler admitting to any past use of marijuana will be found to be inadmissible to the United States.
Considering that the drug will be legal in Canada in a few short weeks, this will require either a huge portion of Canadians never traveling to the U.S. or a lot more lies being swapped at border crossings.
Those hit with a travel ban will be able to challenge it, but the initial cost of that waiver will be $585.00.
What This Means for Marijuana Stocks
This is, frankly, awful news for the marijuana industry.
As the U.S. imposes harsher penalties on those who are legally partaking of the marijuana sector in Canada, it’s going to make things more difficult for those looking to work in the pot industry and maintain a normal life.
More to the point, this is going to increase the fear that many U.S. investors have when considering the marijuana market.
The fact that the drug remains illegal in the U.S.—even highly illegal, now earning travelers a lifetime ban from entering the U.S. for even investing in the sector—has always presented an obstacle to pot stocks. After all, many U.S. investors have been concerned about the legal ramifications of investing in an industry that is deemed illegal by the feds.
While some of those fears have faded with time (and with the success of several key pot stocks on major U.S. listings) the border patrol news goes to show that the fight is far from won.
While marijuana stocks have benefited greatly from a number of key large investors and an increasing number of U.S. investors entering the market, setbacks like this will push some investors out and prevent others from entering.
While the U.S. has improved on the marijuana issue over the years, the marijuana news today shows that there is still a lot of progress that needs to be made.
TLRY stock has gained nearly $100.00 in value since its initial public offering (IPO) on the Nasdaq at $17.00 per share in July. Such huge gains were bound to eventually be met by a pretty sizable correction—a “speeding ticket” doled out by the market.
And we’re now seeing what may be the start of that pullback. The stock was down about 13% in pre-market trading today.
The past few weeks have seen multiple 13% gain days, so this is certainly a change for what has been the hottest marijuana stock around.
Yesterday, in fact, Tilray stock was one of the few winners in the legal marijuana sector while many other pot stocks saw their share values decline. Tilray’s massive run had marijuana stock enthusiasts salivating and pointing to it as proof of the industry’s potential.
While many stocks were down in today’s pre-market trading, Tilray stock was taking the brunt of the damage, compared to many of its equally-sized competitors.
This, however, by no means shows a dying TLRY stock. With there still being a lot of room left for the stock price to rise, I’ve long said that eventually these double-digit gain days would have to slow down, and that a correction would hit.
Whether this is a long, sustained drought or just a flash in the pan remains to be seen. In any case, I expect pot stocks to begin gaining again as we near the Canadian marijuana legalization date of October 17.
Aside from TLRY stock, Cronos Group Inc (NASDAQ:CRON) is another weak performer at the end of this week. The stock was down about seven percent in pre-market trading.
This follows a very strong week for Cronos when the company announced that it was developing lab-grown marijuana, a method that it hopes will help set it apart from its rivals.
While CRON stock was originally boosted by the news, this week saw a severe decline. Cronos experienced a 16% decline in its share price over the past four days leading into Friday, marking it as one of the worst performances of this week.
The company was not able to parlay its interesting news into stock market success, which was not unexpected. After all, many pot stocks faltered this past week, in what is likely the start of the final correction before Canadian legalization.
Aurora Cannabis Stock
Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB), despite being down about six percent in pre-market trading today, has been one of the few winners this week.
While the stock price was largely stagnant over the past three days, considering how poorly many of its competitors have fared, that’s a victory.
Furthermore, Aurora Cannabis recently nabbed a strong deal in South America, gaining a foothold in a very lucrative market that is set to grow. While the deal’s announcement helped bolster the company’s share value earlier in the month, the Aurora Cannabis stock was able to ward off significant losses this week—in part, I believe, due to the goodwill garnered from the South American expansion.
In any case, Aurora is never afraid to make headlines with acquisitions, and its latest foray into South America has already begun to reap benefits.
TLRY, CRON & ACBFF Stock Performances
On the chart below are the recent performances of the stocks of Tilray Inc (black line), Aurora Cannabis Inc (blue line), and Cronos Group Inc (red line):
Chart courtesy of StockCharts.com
It looks like the legal marijuana industry is headed toward at least one more correction before Canada’s marijuana legalization date. The marijuana news today is evidence of that.
How long it lasts is now the question.
I don’t believe we’ll be seeing red for too long. With Canadian marijuana legalization right around the corner, I expect pot stocks to begin perking up in the next few weeks in anticipation, correction or not.