Marijuana News Today: Pot Stocks See Collective Rise

Marijuana News Today
iStock.com/peshkov

Marijuana News Today

The marijuana news today is an outlier for the second half of 2019: pot stocks are rising together, with many seeing a few points in gains. The political side of things, however, once again points to the problem of government interference in the legal cannabis industry.

In the state of Louisiana, we’re seeing a microcosm of all the problems plaguing the broader marijuana industry. Louisiana legalized medical marijuana, but the rollout of the drug has been anything but smooth.

One marijuana-company executive in the state said that as many as a third of the patients in her company’s clinics cannot afford the medicine. (Source: “Medical Marijuana in Louisiana: Questions About Cost Arise,” The Associated Press, November 4, 2019.)

Couple that with the fact that it took four years after legalization before the drug filled shelves and we have pretty much all the major problems affecting the legal marijuana sector rolled up in one state. 

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Legal cannabis sellers in the Louisiana blame the high prices on onerous taxation and regulations. That’s a common refrain from many weed industry players, all the way from Canada down to the Deep South.

Another issue is one that’s unique to the U.S. system: price gouging on medical products. It’s no secret that the way medical products are priced in the U.S. is uneven, to say the least.

Surgeries in the same city can vary by thousands of dollars (sometimes tens of thousands) from hospital to hospital. That’s a larger problem that usually does not involve the cannabis industry, but when it comes to medicinal marijuana, the effects of that uneven pricing scheme are apparent.

And of course, if patients cannot afford the drug, they may go without (even if it is necessary medicine). That leads to a drop in revenue and share prices for medical marijuana companies, not to mention adverse health effects for the people skimping on their medicines.

It’s a horrible situation all around that desperately needs a solution. Wherever the solution comes from—major healthcare reform or the far easier lessening of burdensome regulation of marijuana products—it is needed, and fast.

On the bright side, Louisiana is the first Deep South state to legalize cannabis in any form, speaking to just how far the drug has come in terms of acceptance in the United States.

Federal marijuana legalization in America is one of the most anticipated events in the cannabis industry, and when it does eventually happen, investors can expect to see share prices soar.

The fact that even Republican strongholds like Louisiana are okay with cannabis, at least on some level, speaks to the overall acceptance of the drug nationwide.

When U.S. marijuana legalization eventually goes national, that will be the turnaround the weed stock market needs, likely doubling—or potentially tripling—value for investors buying on the dip.

CTST Stock

The marijuana news today as it pertains to the pot stock market is far more positive than the above troubles would imply. Many pot stocks rose by a point or two this morning, a nice change of pace considering how battered many of those stocks have become over the past few weeks.

One company in particular I’d like to focus on is CannTrust Holdings Inc (NYSE:CTST).

CannTrust stock was down about one point in early-morning trading today, making it the outlier compared to its competitors. But that dip is offset by its 14% gain over the past week.

As I’ve written a few times before, CTST stock is extremely volatile right now.

Having lost more than 80% in value over the past year, the stock is at a true rock bottom. As such, there’s going to be a number of times when investors believe that CannTrust is at its nadir and worth gobbling up at a low price, even if there is a lot of inherent risk still contained within the stock.

Sure, CTST stock’s massive reduction in price does make it appealing, but there are so many question marks still surrounding the company following its license suspension by Health Canada for not following regulations. I’d want to see more from CannTrust before I can consider it a long-term opportunity.

At the same time, it’s hard to imagine CannTrust stock declining much more than it already has, making it safe in a sense. Since it’s already at rock bottom, it’s hard for it to drop much further than that.

So for investors looking for a risky long-term pick, or for those looking to buy and sell day-to-day, CTST stock could be for them.

CURLF Stock

On the flip side of CannTrust we have Curaleaf Holdings Inc (OTCMKTS:CURLF, CNSX:CURA), which was up this morning but down big over the past week. Curaleaf stock jumped two percent in early-morning trading today, but it’s down 13% over the past five days.

CURLF stock, however—unlike CTST stock—is not the victim of some major misstep. Instead, the overall downturn in the industry is hitting the largest U.S. pot stock hard.

That being said, I still believe that the future is very bright for Curaleaf stock. After all, it’s the largest pot company operating in the U.S., meaning it’s poised better than most to take advantage of the U.S. national market when it eventually opens up.

Another boon for CURLF stock is that the company is projecting to rake in $1.0 billion in profits next fiscal year. If Curaleaf manages to be the first pot company to cross that threshold, investors will likely come running back in droves.

CTST & CURLF Stock Performances

The performances of CTST stock (black line) and CURLF stock (blue line) over the past week are seen in the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today is a mixed bag, but with the pot stock market being up, we’ll count it as a strong day.

While we’d like to see governments move faster on fixing the problems they created for legal marijuana companies, at the end of the day, the industry is still headed toward a very bright future.