Marijuana News Today: Market Gets Hammered, Australia’s Billion-Dollar Pot Market

iStock.com/gonin

Marijuana News Today

The marijuana news today marks a continuation of the correction that pot stocks have been steeped in since marijuana legalization went into effect in Canada. Meanwhile, the Australian marijuana market is showing big promise for the future.

First, the good news.

Australia’s medical marijuana business is projected to grow exponentially in the coming years. Right now, it’s worth about $18.0 million, but analysts estimate that it will balloon to a multi-billion dollar industry within the decade.

A new report suggests that Australia’s legal marijuana sector will rise to $1.2 billion by 2024 and $3.0 billion by 2028. (Source: “Australia’s cannabis industry set to boom: report,” news.com.au, October 29, 2018.)

Advertisement

That’s without accounting for the Australian recreational cannabis market, which could be worth up to $8.8 billion annually in a decade if the country passes legislation on the matter sooner rather than later.

This news is more important than ever as we experience a marijuana stock market correction—the market’s rebuke for the massive gains seen in August when Constellation Brands, Inc. (NYSE:STZ) made its $4.0-billion investment into the marijuana industry and single-handedly sparked a bull rush.

The marijuana stock market, as we all know, is primarily driven by developments in the news. It’s why we round up all the biggest movements on a daily basis.

With Canadian marijuana legalization now firmly behind us, the industry needs the “next big thing” to help generate buzz and excitement. Otherwise, the correction could continue for many weeks, or even months.

Remember that we saw the exact same thing play out earlier this year.

The end of 2017 saw massive stock market gains industry-wide. But those gains came in so fast and heavy that the cannabis sector needed several months of a correction until it found its footing again in August, which, as mentioned above, was another great time for pot stocks.

The same could be happening now as we await the next big move in the marijuana industry.

And that’s what makes Australia—and any other major new market—so important. If any of these countries follow Canada and choose to legalize recreational marijuana, we can expect to see a resurgence in marijuana stock prices.

Furthermore, we’re hearing about a lot of non-marijuana companies sniffing around the pot industry, seeking out potential investment deals that, depending on their sizes, could help reinvigorate the sector.

Until either of these events take place, however, we are likely to see a stalled—and perhaps even declining—pot stock market.

That said, I don’t believe that now is the time to flee, as the future of marijuana is still very bright, even if the near term holds a few challenges.

CGC Stock

In what is sure to be another disappointing week in marijuana stocks, Canopy Growth Corp (NYSE:CGC) started the day on a sour note.

CGC stock tumbled by nearly eight percent in early-morning trading today. Over the past five days, CGC stock has dropped by 13%.

This is all par for the course as the cannabis sector struggles with the current correction.

As has been the case in the past, I anticipate that Canopy Growth will emerge from the correction in better shape than its competitors.

Canopy Growth still remains the pot stock with the best foundations, one of the largest market caps, and one of the savviest business models—with a focus on both international and Canadian markets.

Overall, there’s still a very bright future for CGC stock. Unfortunately, the next few weeks and months are likely to be on the weaker side.

Now is likely not the time to panic sell, but I would probably wait a week or two before trying to buy Canopy Growth stock at a discount, since I predict that the price will fall further in the coming days.

On the other hand, this could all turn around in an instant. If a new investment rocks the marijuana industry or another country announces plans for legalization, all this misfortune that I predict could be wiped away.

ACB Stock

While the entire cannabis stock market has been feeling the heat from the correction over the past few days, perhaps no company has been more disappointing than Aurora Cannabis Inc (NYSE:ACB).

ACB stock was supposed to see its value grow in leaps and bounds as it registered on the New York Stock Exchange (NYSE)—just the second marijuana stock to do so.

But we’ve seen that development tempered by the massive marijuana correction, and rather than help Aurora stock as first predicted, the timing of its jump to the NYSE has been disastrous.

The company lost what otherwise would have been a great way to stir up investor interest by switching to the NYSE in the midst of the correction.

Instead of seeing strong gains, we saw ACB stock value lose about 27% over the past five days, with another roughly eight percent fall this morning.

All is not lost for Aurora stock, though; it still has a lot of potential for growth in the coming months. But, as it stands now, the stock is looking to be among the hardest hit in the coming recession, adding insult to injury after it lost out on what otherwise would have been a strong showing following its NYSE listing.

CRON Stock

During the marijuana stock market correction, Cronos Group Inc (NASDAQ:CRON) has managed to be among those least affected by the marijuana stock market downturn.

Don’t get me wrong, CRON stock is still taking heavy losses.

Much like its counterparts, Cronos stock is down about 11% over the past five days, and down about three percent in early-morning trading today.

Still, this is far superior to the numbers we’re seeing from other marijuana stocks, potentially speaking to an easier time for CRON stock in the coming correction.

This could in part be due to its presence on the Nasdaq, as well as the company’s lack of big gains in 2018 prompting a severe pullback.

As it stands, I’m not as high on CRON stock’s future as I am about the other two stocks I mentioned above (CRON stock is notoriously harder to predict). Cronos, however, may be one of the least affected by the current correction, making it perhaps one of the strongest potential picks coming out of the pullback.

CGC, ACB, & CRON Stock Performances

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

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today is a whole lot of bitter with only a little bit of sweet, especially for the short term.

While the Australian marijuana market is showing impressive growth, that’s not going to do the marijuana stock market any good until the country announces a plan to legalize recreational pot.

Otherwise, marijuana investors ought to prepare themselves for what could be a long and painful correction—even if strong gains are waiting on the other side.