Marijuana News Today: Despite Legalization, Pot Stock Market Drops

Marijuana News Today
iStock.com/VladK213

Marijuana News Today

As you would expect, in the marijuana news today, we’re covering the federal legalization of marijuana in Canada and the interesting pullback we’re seeing across the pot stock market.

With marijuana now officially legalized in Canada, you would have expected to see a jump in marijuana stock value. Instead, we’re seeing a fairly substantial pullback from multiple stocks, with many losing anywhere from five percent to 10% during early-morning trading.

This isn’t entirely unexpected, however.

The gains from marijuana legalization have been priced in for some time now, so it makes sense that we’re not seeing a massive rush on the pot stock market.

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The pullback was a little unexpected, however—at least the magnitude of it was.

In any case, this fall in stock value will just be a blip as the Canadian marijuana industry continues down a path that will see billions of dollars in revenue pour in.

Of course, as I’ve been saying for many months now, Canadian marijuana legalization is about far more than just the Canadian market.

The important thing now is to closely observe just how well Canada can implement marijuana legalization across its land.

If major tax revenue pours in while crime drops—two of the biggest projected benefits of marijuana legalization—then you can expect other countries to point to Canada as a successful model.

This will, in turn, speed up the legalization process in other countries and begin to expand the global marijuana market.

If, on the other hand, Canada becomes fraught with problems and miscalculations following marijuana legalization, then we may very well see a dampening of the more vigorous calls for marijuana legalization across the globe.

That makes these next few months critical for the global pot trade. Canada needs to make a strong showing, with firm and consistent laws regulating pot.

Of course, these laws will naturally be uneven, since marijuana is being regulated by the provinces instead of the federal government. There’s still a strong opportunity here for good governance to win out and not only benefit its constituents via increased tax revenue and lower expenditures on crime, but also help boost the profile of legalized pot and prove that it can indeed work.

If that all goes according to plan, Canada could become the central hub of the marijuana industry for years to come.

Canopy Growth Stock

As I mentioned earlier, the marijuana sector has seen an industry-wide pullback of several percentage points near-universally across the pot stock market.

Canopy Growth Corp (NYSE:CGC) is one of those hard-hit marijuana stocks, although CGC stock has not dropped as much as some of its rivals.

CGC stock fell about three percent in early-morning trading today, which is an improvement from where it was at the start of the day—down about five percent.

This could indicate that, by the end of the day, we’ll see CGC stock make a full rally into the positive, but it’s hard to project the hourly movements of the market.

In any case, CGC stock is still up about seven percent over the past five days and remains one of the most exciting marijuana stocks around.

The company recently completed an acquisition of U.S. hemp producer ebbu LLC. This move once more builds on Canopy’s already strong presence in the marijuana market by diversifying its product line, allowing it to tap into the full potential of the cannabis market.

While the future of marijuana stocks are now going to be reliant on the financial numbers coming out of the Canadian market, I expect CGC stock to do just fine in the coming months.

Cronos Stock

Another company that was down big-time this morning, Cronos Group Inc (NASDAQ:CRON), is similarly going to be subject to the financial figures it releases post-Canadian legalization.

CRON stock dropped about five percent in early-morning trading today, which is actually a vast improvement on the nine-percent fall it initially experienced. This again suggests that a late-day rally could be in store for the pot stock market.

In any case, CRON stock has jumped by about 12% over the past five days.

This rise was helped along when the company scored a partnership with the Technion Research & Development Foundation of the Technion – Israel Institute of Technology to conduct research on cannabidiol (CBD) and its uses in skincare products. (Source: “Cronos Group Inc. Partners with Technion Research & Development Foundation for Cannabinoid-Based Skin Care Treatments,” Cision, October 15, 2018.)

CGC & CRON Stock Performances

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

Chart courtesy of StockCharts.com

Analyst Take

This is an auspicious day in the marijuana industry, pot stock market notwithstanding.

The event that so many have looked forward to for so long marks a key moment in the young cannabis industry, namely that a powerful economic player like Canada has created a path for other countries to follow toward legalization.

If all goes according to plan—and there’s no reason at this point to expect otherwise—we’re likely to see massive gains from the legal marijuana industry for years to come as more markets open up to cannabis.