Marijuana News Today: Pot Stock Market Stages Big Rally, Global Cannabis Usage Increases
Marijuana News Today
It’s all sunshine in the marijuana news today as the pot stock market stages a rally after several poor performances. On top of that, global cannabis usage is on the rise.
First we’ll get to the findings of the United Nations Office on Drugs and Crime, which released a report listing cannabis as having the highest usage among all drugs on the planet. The report says that 188 million people used the drug in 2017. (Source: “World Drug Report 2019: 35 million people worldwide suffer from drug use disorders while only 1 in 7 people receive treatment,” United Nations Office on Drugs and Crime, June 26, 2019.)
And the number of cannabis users has swelled by 60% over the past decade. (Source: “Global marijuana use rose by 60 percent over the past decade,” DW, June 26, 2019.)
So what are the takeaways from this report? The first is that cannabis is truly a global product with wide-reaching potential. There’s a huge number of potential consumers for the legal cannabis market. When companies are able to tap into them, expect to see sales surge.
That’s something that everyone who is bullish about the marijuana market is looking forward to: the broadening legality for what is already an international trade.
Marijuana stocks will surge when companies are able to reel in profits that greatly eclipse their current sales. And that is bound to happen as the aforementioned millions of users are brought into the legal market with increasing frequency.
Another upshot is the growth aspect: the cannabis sector has not reached its potential, even with its huge user base. When the drug is legalized, more people who were wary of trying the drug while it remained illegal will likely give it a go, further expanding the market.
Moreover, medical applications that are still largely limited by legal constraints will also develop and provide people with more reason to partake of cannabis—whether it’s for cancer treatment, pain management, or any number of other applications.
Marijuana companies should celebrate findings like these. It shows that the cannabis market is global and growing, two very strong attributes for a nascent industry. In fact, the legal marijuana sector is unique in that it’s not trying to sell a new product to consumers; instead, it’s simply repackaging an already tried and tested one.
As a comparison, nobody could have been certain that computers would have blown up into the global phenomenon that they are now. Visionaries had to believe in their products and take a chance.
Cannabis is different in that all of the market research has already been done by the black market. It’s a field-tested product that is guaranteed to appeal to millions of people around the globe. It’s hard to argue with the potential of a business like that.
The marijuana news today wasn’t just positive for the future of the industry, it was positive in the present as pot stocks rallied in early-morning trading. This was a welcome reprieve from the past several weeks of negative moves.
One marijuana stock in particular has been enjoying the surge: Hexo Corp (NYSEAMERICAN:HEXO). HEXO stock soared by four percent in early-morning trading today, a sizable comeback considering that the stock is down by nearly double-digits over the past five days.
Hexo remains a favorite of mine, even if recent events have not been kind to the company.
Oppenheimer & Co. Inc. recently downgraded HEXO stock from an “outperform” to a “perform” rating, sending shares on a bit of tailspin.
“With our updated forecasts and incorporating Newstrike, we now view shares as more fairly valued,” wrote Oppenheimer analyst Rupesh Parikh. (Source: “Hexo shares slide 3.4% premarket as Oppenheimer downgrades stock to perform from outperform,” MarketWatch, June 25, 2019.)
I don’t necessarily agree, considering all the many attributes that Hexo has, including a massive Big Alcohol partnership, strong supply deals in Canada, and a marijuana penny stock price.
Still, as is usually the case, in downturns, smaller stocks are hit the hardest. Hexo happens to fall into that category.
But the horizon is also looking bright for the company as it looks to fulfill its potential with cannabis-infused beverages.
Hexo and alcohol company Molson Coors Brewing Co (NYSE:TAP) are ready to move into the cannabis-infused beverage space with a joint venture called Truss. It’s expected to have various drinks ready for sale on December 16, when cannabis-infused beverages become legal in Canada.
“We’ll have a very large supply so we’ll be in a good position to be able to meet the demand of the marketplace and at the same time also ensure that we’re meeting the variety that the marketplace wants,” said Jay McMillan, Hexo’s vice president of strategic development. (Source: “Hexo, Molson to sell cannabis drinks in Canada on day they become legal in December,” Financial Post, June 18, 2019.)
The company also said it would seek to enter the U.S. cannabidiol (CBD) market by 2020, another potentially very lucrative move.
Overall, I’m still bullish about HEXO stock, even if times have been rough as of late. In fact, I consider its current share price to be a discount, considering how much potential the stock has.
Another pot stock that I would deem to be discounted following the recent stock market pullback is Canopy Growth Corp (NYSE:CGC).
I’ve already written enough about the company’s most recent quarterly report, so I won’t repeat myself here, but despite the disappointing financial numbers, there are still several very positive factors going in Canopy Growth’s favor.
From its position as the global leader in the pot sector, to smart leadership, to strong foundations across the U.S. and Canada, CGC stock is by no means down for the count.
Canopy Growth stock gained 2.5% in early-morning trading today as it finds itself down seven percent over the past five days.
While the company will have to do some work to recover from its most recent earnings report (namely, have a strong rebound next quarter), I wholeheartedly believe that CGC stock still has all the tools to be a huge gainer for years to come.
Sure, the pot stock market took a bit of a dive that will have hurt investors’ portfolios, but loyal readers who invested in Canopy Growth stock at the beginning of the year would have netted a 50% gain. That’s not too shabby for just seven months. And more gains are likely to follow.
HEXO and CGC Stock Performances
The performances of HEXO stock (black line) and CGC stock (blue line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The positivity in the marijuana news today is a sight for sore eyes.
The recent bad run on the pot stock market may not have totally come to a halt, but today was a strong day for the marijuana stock market, while the future of the industry looks as bright as ever.