Marijuana News Today
The marijuana news today explores the drop in the pot stock market that we were experiencing this morning, as well as Michigan’s recreational marijuana vote coming in November.
The U.S. mid-term elections are fast approaching. Political pundits like to say that this November is one of the most important elections in living memory, and that’s certainly true as far as marijuana is concerned.
Several states will have their voters cast ballots as to whether marijuana should be legalized either medically or recreationally, with the largest state among them being Michigan.
That state is looking at whether to legalize recreational pot and gain access to a projected $134.5 million in tax revenue that legal pot would yield.
That number was generated by VS Strategies, a Colorado-based cannabis consulting firm hired by the Coalition to Regulate Marijuana Like Alcohol, which is leading the campaign to legalize pot in Michigan.
“We’re estimating $520 million in taxes from 2020-24,” said Andrew Livingston, a VS Strategies policy analyst. “By 2023, Michigan will reach maturity with sales of just under $1.5 billion (for both medical and recreational marijuana).” (Source: “Estimated tax haul from marijuana sales would grow to $134 million per year,” Detroit Free Press, October 1, 2018.)
According to Livingston, the revenue from legal recreational cannabis is expected to grow in Michigan from $53.7 million in the first year to $134.0 million by the time the market becomes mature.
Of the state’s almost-10 million inhabitants, about one million have used marijuana in the past month and an additional 3.5 million have used marijuana sometime in their lifetime.
What This Means for Pot Stocks
While the political process to push through marijuana legalization will have little impact on the day-to-day movement of marijuana stocks, the long-term projections are going to be dramatically altered by the results of the upcoming November elections and ballot measures.
With every state that legalizes marijuana, we come one step closer to a full-blown push for federal legalization.
It only grows more absurd each day that a huge chunk of the country can legally partake of pot in medical or recreational form, yet the federal government still classifies the drug as on par with heroin.
That classification is certain to change, but the when is subject to how fast states can legalize pot.
Furthermore, the mid-term elections are extremely important in that a Democrat majority in the House and Senate could push the needle on marijuana legalization.
Several high-ranking members of both the House and Senate have come out in support of pot reform, especially on the Democrat side.
If the party regains control of both houses, there’s a chance they may put pot reform on the agenda. That would dramatically accelerate the push toward federal legalization—something that marijuana companies are eagerly awaiting.
Considering President Donald Trump’s most recent adoption of a laissez-faire attitude toward pot, if the Democrats decide to push for pot deregulation, there’s little standing in their way.
The volatility surrounding Tilray Inc (NASDAQ:TLRY) has continued apace today, with early-morning trading sending the company on a roller-coaster ride.
Initially down about seven percent to start the day, TLRY stock rallied and then fell by about two percent. As to where the stock price will end up later today, it’s very hard to predict.
The entire cannabis industry was down several points, so it is likely that today will be a down day for TLRY stock.
Having said that, there will probably be a lot of movement in Tilray’s share price; there almost always is.
As such, for day traders, today could be a good day to make a killing (if you trust your timing). Otherwise, longer-term investors might want to take a backseat on TLRY stock today and allow things to settle before jumping back in.
Another stock that was down big to start the day was Aphria Inc (OTCMKTS:APHQF, TSE:APH). APHQF stock dropped about six percent in early-morning trading.
Aphria was once one of my favorite picks in the marijuana industry, but 2018 has not been kind to the company.
Despite making several strong moves, particularly entering the Latin American market and staging an impressive rally, Aphria stock remains one of the riskier plays.
It simply does not have the stability of similarly-sized companies, nor the positive volatility of Tilray stock, leaving it as a weaker pick at this time.
Despite Aphria’s current predicament, the future could be bright for the company because it recently closed its deal to enter the Latin American market via an acquisition of assets in several South American countries.
“Aphria continues to execute on its plans for strategic international expansion, including in Latin America and the Caribbean,” said Aphria CEO Vic Neufeld. (Source: “Aphria Poised to Become a Latin America Cannabis Player,” Small Cap Power, October 2, 2018.)
With a combined population of nearly 640 million, and with significant momentum from numerous countries introducing new or modernizing existing medical cannabis legislation, the region represents a significant opportunity for long-term growth. It also hosts some of the most favorable conditions for cultivating high-quality medical cannabis at substantial efficiencies – ideal for both regional supply and export opportunities. This acquisition firmly cements Aphria’s leadership in the region and on the global cannabis stage.
TLRY & APHQF Stock Performances
TLRY stock (black line) and APHQF stock (blue line) were both down this morning, as seen in the chart below.
Chart courtesy of StockCharts.com
The future of the U.S. marijuana market is already decided; it’s just a matter of when the federal government will legalize pot.
The November mid-term elections and related ballot measures will be highly impactful to the future of pot, whichever way they swing.
Meanwhile, the legal cannabis industry has been undergoing a small downturn, but that will likely clear up the closer we get to Canadian marijuana legalization on October 17.