Marijuana News Today: Pot Stocks Closely Watching Canadian Regulation

Marijuana News Today: Pot Stocks Closely Watching Canadian Regulation
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Marijuana News Today

Regulations continue to be hammered out in Canada regarding the weed industry in the marijuana news today, with pot stock investors watching intently to see how it will turn out.

It seems that news trends happen in waves in the marijuana business, and I’ve recently been focused on the regulations that are continuing to take form in Canada.

The next battle for pot is over what the marketing rules should be. Regulators are deciding whether marijuana ought to be treated like cigarettes, with almost no marketing allowed of any kind, or like alcohol, which has far fewer advertising restrictions.

It would make the most sense, at least from my perspective, to give cannabis at least as much leeway as alcohol. After all, many studies have pointed out that marijuana is likely far less hazardous to one’s health than booze is. Furthermore, pot is not nearly as addictive or deleterious as smoking.

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But in Canada, it appears that regulators are of a different opinion. Health Canada recently released its new regulations on packaging, coinciding with its official rules and timetables on cannabis edibles. (Source: “Marijuana-infused drinks maker disappointed with generic packaging rules,” CBC, June 17, 2019.)

The new rules set strict limitations on packaging, including limits on brand logos and descriptions of products.

This, naturally, did not go over well with the industry. After all, it appears to be an overreaction to the legal marijuana sector.

Now I will provide this caveat: edibles are a different beast than smokeable pot. While all marijuana products require the consumer to be of age, edibles are going to be the easiest for young people to accidentally imbibe.

Still, Health Canada’s reaction is one of the latest additions to a long pattern of overreaching policies that have served to hinder the legal marijuana sector while allowing the black market to flourish.

That’s worth noting, since many gray market operators (marijuana sellers that have storefronts and seem legitimate but are technically illegal) have to follow no such regulations.

It’s another blow against marijuana companies that follow the rules and another boon to those who operate outside the law.

Furthermore, from a long-term perspective, this could end up benefiting U.S. cannabis companies to the detriment of Canadian ones.

You see, while the U.S. is still several years away from federal marijuana legalization, one benefit to the delay is that it will be able to craft its laws with the Canadian experiment having been underway for years. That means the U.S. can select the regulations it likes and discard those that it doesn’t.

The upshot to this process is that the U.S. may end up with the most marijuana-friendly legislation in the world. This would make the American market that much more lucrative for pot companies, but it may also benefit U.S. over Canadian companies.

Considering that there will be a showdown between the two countries for dominance in the industry (at least, that’s what I’m predicting in the years ahead), ultimately it will come down to which country is more cannabis-friendly. Regulatory burdens or the lack thereof will play huge roles in deciding which country wins out.

OGI Stock

The marijuana news today as it pertains to the pot stock market is slightly positive, even if we have been going through a rough time as of late. Many marijuana stocks have suffered in recent weeks as the first real downturn of 2019 has struck.

Pot stocks have been flagging for a bit now, with May especially having been a bad month. June has been up and down so far, but on the whole, there has been a weak performance by the pot industry.

Which brings us to one of those weaker performers, OrganiGram Holdings Inc (NASDAQ:OGI). Long touted as one of my favorite pot stocks (which remains the case), the recent weeks have not been kind to OGI stock.

While it did gain over three percent in early-morning trading today, the stock saw declines of 11% over the past five days.

Much of this has to do with the valuation of OrganiGram stock. Marijuana penny stocks are often the hardest hit when the industry turns, and we’re seeing that take place now.

On the flip side, penny stocks are often the fastest to recover. Or at least, if not the fastest, they often see the biggest upswings following pullbacks.

OrganiGram Holdings Inc switched over to trading on the Nasdaq at an inopportune time, with the change not having the desired impact that I had hoped for. Instead, due to the pot industry largely slowing down, OrganiGram stock’s move to the Nasdaq hasn’t done much for the company in the short term. But I believe that will change.

In any case, I have all the confidence in the world that OGI stock will bounce back. It will just require a little bit of white-knuckling and some patience.

CGC Stock

The opposite of a marijuana penny stock, ol’ reliable Canopy Growth Corp (NYSE:CGC) continues to demonstrate why it is such an impressive performer in the marijuana stock market. CGC stock gained over a point in early-morning trading today, while having lost one percent over the past five days.

While not a stellar showing by any means, Canopy Growth stock is stable. Most pot stocks over that same time period have seen major fluctuations in value, whereas CGC stock has been relatively steady.

Sure, Canopy Growth has taken a hit like many other companies, but that hit hasn’t been nearly as severe as it has been in other areas of the market.

As such, for marijuana investors who want to enjoy the riches of the cannabis trade without the headache of extreme volatility, Canopy Growth Corp may be the one for you.

OGI and CGC Stock Performances

The performances of OGI stock (black line) and CGC stock (blue line) over the past week are seen on the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana industry continues to be shaped before our very eyes, and the marijuana news today shows how that will affect the future of the industry.

Depending on how the regulations and laws eventually shake out, we will see a seismic reshaping of the pot sector.