Marijuana News Today
We’re experiencing a bit of the mid-week blues in the marijuana news today; the pot stock market has been taking a pretty thorough thrashing. Meanwhile, U.S. marijuana legalization continues, with New Hampshire lawmakers hearing arguments for marijuana legalization in the state.
New Hampshire is a small state that likely won’t shake up the U.S. marijuana paradigm, but it is now officially in the running with New York, Illinois, and several other states to possibly see recreational marijuana legalization hit in 2019.
Legalization supporters face opposition from the state’s governor, who said he would veto a marijuana bill, and from the usual motley throng of marijuana detractors. (Source: “New Hampshire marijuana bill gets public hearing,” Star Tribune, February 5, 2019.)
The Democrats now control both state houses, however, so a bill may very well be passed in the legislature and force the governor’s hand.
The prospect of another state legalizing recreational marijuana brings us ever closer to that long-desired day when the U.S. federal government will actually represent its citizens and push through marijuana reform. Is that asking too much from a democracy?
In any case, that’s the positive news. It’s a rather slow news day aside from that, with the only other marijuana headlines having to do with a positive effect on sperm count. In my expert opinion, I doubt that story will push marijuana stocks one way or the other.
The pot stock market has been abuzz with activity, however—little of it being good.
Across the board, marijuana stocks were down big to start the day, with most of our favorite stocks losing upwards of five percent.
There’s no major news event that sparked this pullback, so this could be an aberration, with tomorrow heralding brighter skies and positive gains.
Now, we do have to address the elephant in the room: the possibility of a correction.
One day of losses does not a correction make, but I believe we need to brace ourselves for a marijuana downturn that will hit sometime in the first third of 2019.
This is due to the fact that we saw huge growth in January. When marijuana stocks balloon with that type of speed, it’s almost always met by a correction within the next few months.
Gains will still outweigh losses, so those looking to go long on marijuana ought to hold on (and there will be plenty of more gains to come). But for those looking to lock in profits now, I’d suggest waiting for the next couple of days.
If the trend continues downward, a correction is likely setting in. If it bounces back, then there’s still plenty of time to eke out higher returns before the downturn.
The marijuana news today has a lot of pot stocks hurting, not the least of which is Canopy Growth Corp (NYSE:CGC).
CGC stock dropped over six percent in early-morning trading today, and the fall wiped out the past five days of gains, putting the stock at a four-percent decline over that period.
However, all this does not change my position on CGC stock.
The company saw rapid, intense growth to start 2019, and I expect that a correction will be in store for the company. We’ve seen this time and again. The important thing to remember is that this stock almost always comes out on top.
This is based on a number of factors that I’ve talked about at length before, but let’s rehash some of the more pertinent ones.
CGC stock has a huge arrow in its quiver, ready to hit the market bullseye. Canopy Growth signaled its intention to enter the U.S. hemp market when the Agriculture Improvement Act of 2018 legalized hemp cultivation nationally. Such a move would make Canopy one of the first marijuana stocks with access to the U.S. market.
This would obviously be a seismic shift for the company. If Canopy Growth manages to fully capitalize on the growing U.S. acceptance of cannabidiol (CBD), it could stake a claim as a major player in the U.S. cannabis market.
On top of that, you have all the usual goodies: strong supply agreements in Canada, international expansion, Big Alcohol partnership, strong leadership, prominence, etc.
Which is to say, correction or no, I believe that Canopy Growth stock will experience high gains in 2019.
Like Canopy Growth, Aurora Cannabis Inc (NYSE:ACB) was down big to start the day.
ACB stock fell nearly five percent in early-morning trading today. But unlike Canopy Growth stock, Aurora stock still is up over the past five days, with gains of about eight percent.
Aurora is in a very similar situation as Canopy Growth across most fronts. It has an international presence, great supply agreements, and strong production capacity, but it lacks a partnership with Big Alcohol, Big Tobacco, or some other major outside industry.
There was talk of Aurora and The Coca Cola Co (NYSE:KO) negotiating a deal in September 2018, but that has yet to materialize.
Overall, ACB stock has a lot of potential, but I’m not as sold on it as I am on Canopy Growth.
The upside is that there’s still a lot of room for Aurora to grow. If it is able to land a deal with Coca-Cola to produce cannabis-infused drinks, or even a deal with any other company, that would naturally stir its share value.
Until then, however, Aurora stock a weaker outlook compared to Canopy Growth stock, although I’d say it has the higher potential for massive growth in 2019.
The final top pot stock in the news today we’ll look at is Cronos Group Inc (NASDAQ:CRON).
Similar to the aforementioned two companies, Cronos slipped by more than 10% to start the day—a huge hit. CRON stock still managed to register about six-percent gains over the past five days, however.
Cronos stock is a bit of a different animal compared to the other two pot stocks in the marijuana news today, due to its presence on the Nadsaq.
The Nasdaq is a little more volatile than the New York Stock Exchange (NYSE) when it comes to pot stocks, with the two companies on the exchange—the other being Tilray Inc (NASDAQ:TLRY)—often seeing bigger movements compared to their NYSE counterparts.
In any case, not to repeat myself, but Cronos stock has nearly all the positives of Canopy Growth, only I’d say to a lesser degree.
As such, I still expect CRON stock to emerge from 2019 with big gains, even if it will likely be in the shadow of CGC stock.
CGC, ACB, and CRON Stock Performances
The performances of CGC 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
Let’s rip the band-aid off now; there will be a marijuana correction in 2019.
Whether it starts today or 10 weeks from now, the massive growth in January necessitates a pullback. It’s the ebb and flow of the market that we’ve seen play out a half-dozen times before.
And like those previous ups and downs, the marijuana stock market will bounce back with greater gains on the other side of the downturn. So, for those looking for short-term profits or long-term prospects, pot stocks are still some of the more promising investments out there.