Marijuana News Today
In Canadian marijuana news today, we have our first bit of concrete evidence post-legalization that the pot sector is indeed on its way toward becoming a powerhouse industry.
While it may not be surprising to those who closely follow the industry, the numbers from Canada’s first full month of marijuana legalization are heartening, to say the least.
Statistics Canada released data showing that Canadians bought $41.0 million worth of weed in the first month post-legalization. Moving forward, the agency will be following monthly sales to provide a more complete economic picture.
“Retail figures will vary as new stores continue to come on line and the marketplace continues to evolve,” said Statistics Canada. (Source: “Canadians Spent $41 Million on Weed in First Month After Legalization,” Bloomberg, January 23, 2019.)
Estimates have the Canadian marijuana industry valued at CA$5.5–$10.0 billion per year.
It’s worth noting that the sales data did not fully account for discrepancies in the rollout of marijuana legalization across the country. For instance, in the province of Ontario, there are no legal physical stores from which to buy pot yet; they won’t open until April. Considering that Ontario is the largest and richest province in Canada, that is naturally going to affect the figures.
Another caveat is that many products that Canadian consumers want—like edibles—remain illegal, but legislation is currently underway that would change that.
The statistics also cannot account for the massive under-supply of marijuana that has plagued Canada since legalization.
Retailers across the country were running low on pot for weeks and weeks, and many are still struggling to meet demand. This is due to a number of factors, but it was not unexpected. We’ve seen supply shortages in almost every state in the U.S. that legalized marijuana.
All this is to say that the legal marijuana sector has just begun scratching the surface of its full potential in Canada.
Ontario will have legal storefronts starting in April, edibles legalization is eventually on its way, and the supply problems are sure to be addressed as the industry matures.
In other words, this has been a roaring start to what is bound to be a massive industry for years to come.
The marijuana news today on the stock market is that there has been a pretty decent bump across the board. Many weed stocks have gained a few points here and there.
One such stock is Tilray Inc (NASDAQ:TLRY). Tilray stock jumped about two percent in early-morning trading today, but it’s down big over the past week. The stock price fell nearly 15% over the last five days.
At this point, TLRY stock is looking to be every bit as volatile in 2019 as it was in 2018.
I was hopeful that we’d see a little more stability from Tilray stock this year (since its roller-coaster initial public offering (IPO) period is well behind it), but that does not appear to be the case. Having said that, there is still a lot of potential in the marijuana giant.
The company is riding high after it purchased Natura Naturals Holdings Inc. in a deal valued at $70.0 million, almost doubling its domestic cultivation capacity.
Tilray is set to acquire Natura’s 61,500-square-meter greenhouse cultivation facility, of which 14,400 square meters is licensed. (Source: “Tilray to buy Natura for up to $70 million, doubling Canadian cultivation capacity,” Financial Post, January 22, 2019.)
Another company experiencing a good bit of success today is Aurora Cannabis Inc (NYSE:ACB). ACB stock jumped by about 2.5% in early-morning trading today. Despite that bump, the stock is down 15% over the past five days.
Unlike Tilray stock, however, Aurora stock has not faced such a persistent drop.
Over the past several months, while TLRY stock has fallen consistently, ACB stock has seen strong gains. Of course, there was a time near the end of 2018 when Tilray was leading the way in the marijuana industry, but that course has now fully reversed.
Aurora, meanwhile, has opened 2019 in much the same way it performed in 2018: acquisition-heavy.
The company recently bought Whistler Medical Marijuana Corporation in an all-stock deal worth CA$175.0 million. The acquired company is expected to have a total production capacity of over 5,000 kilograms per year when its second location reaches full capacity. (Source: “Aurora Cannabis buying Whistler Medical Marijuana in deal worth up to $175M,” Global News, January 14, 2019.)
Aurora also nabbed some headlines today when it closed its previously announced offering of 5.5% convertible senior notes due in 2024 for gross proceeds of US$345.0 million. (Source: “Aurora Cannabis Closes Offering of Convertible Senior Notes,” Cision, January 24, 2019.)
The last marijuana stock we’ll examine today is also on the rise; Cronos Group Inc (NASDAQ:CRON) saw modest gains to start the day.
Up by more than one percent this morning, CRON stock has performed admirably over the past five days, jumping 14%.
Cronos stock was also recently named one the best marijuana stocks in the world by CIBC World Markets. (Source: “Canopy Growth set to become the ‘global titan’ of cannabis: CIBC report,” The Ottawa Citizen, January 21, 2019.)
Furthermore, the company scored a win this morning when it announced that it had received a CA$65.0-million secured non-revolving term loan credit facility. (Source: “Cronos Group Inc. Announces Closing of $65 Million Credit Facility,” Cision, January 23, 2019.)
TLRY, ACB, and CRON Stock Performances
The performances of TLRY stock (black line), ACB stock (blue line), and CRON stock (red line) over the past week are seen on the chart below.
Chart courtesy of StockCharts.com
The marijuana news today should be a shot in the arm for all marijuana bulls.
The sales numbers coming out of Canada are very good. While they were on the lower end of projections for the market’s total value, the figures are incomplete and do not represent the full potential of the Canadian cannabis market.
When we see brick-and-mortar stores open in Ontario and edibles added to the legal market, expect to see sales increase and the overall outlook for the legal marijuana sector brighten.
Furthermore, the marijuana stock market had gains across the board of about one to two percent this morning. While not enough to make your head spin, the return to stability following the volatility at the end of 2018 is welcome.