Marijuana News Today: Pot Stocks Rebound as Some Stores Sell Out Following Marijuana Legalization

Marijuana News Today
iStock.com/The-Vagabond

Marijuana News Today

It’s day two of marijuana legalization in Canada. As such, in the marijuana news today, we’re examining some of the developments we’ve seen in the aftermath of October 17, including a pot stock market rally, the cannabis prices in Canada, and stores being short on weed supply.

As was to be expected, many marijuana stores were woefully unprepared for the onrush of marijuana buyers. (Source: “Weed supply low and N.L. stores running out, but pot plants can’t grow any faster,” CBC, October 17, 2018.)

This has happened multiple times in the U.S. when states have legalized pot, with retailers running short on supply within days or even hours, as is the case in certain parts of Canada.

One store in Newfoundland claimed that it only received CA$10,000 of its CA$70,000 shipment, meaning that it was severely low on stock as people clamored to get their hands on legal weed.

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This speaks to the production infrastructure in Canada. Whether due to a simple shipping error or a matter of regulations slowing the ability to provide marijuana products, this problem will need to be solved quickly if weed companies can hope to take full advantage of the marijuana industry.

Another issue popping up in Canada is that marijuana prices in some provinces are simply too high, well above the black market and gray market prices. (Source: “Priced too high? Shoppers balk at marijuana price tag,” CBC, October 18, 2018.)

This is another growing pain that marijuana producers and sellers will have to negotiate, figuring out the best price for their products as innovation reduces the cost of production and customers go where the best deals are.

All these problems are likely to be solved in due time, and were anticipated.

This is such a new industry that these types of problems were almost guaranteed. We’ll likely be seeing a lot of changes in marijuana policies and sales figures as time goes on and companies figure out how best to access the market.

For now, we’re going to see a bundle of these obstacles pop up and complicate things somewhat for pot stock investors.

If these problems persist long enough that they dramatically hurt sales so that they fall below expectations on the next quarterly report, expect marijuana stocks to take a substantial hit.

If these problems can be rectified in short order, however, the effect on pot stocks will be minimal.

Tilray Stock

Tilray Inc (NASDAQ:TLRY) has been riding high following marijuana legalization, with the stock rising about five percent in early-morning trading today.

Tilray stock, of course, is one of the most volatile picks around, benefiting greatly from its exposure to investors on the Nasdaq. Over the past five days, it has climbed about 17%.

Tilray CEO Brendan Kennedy has recently been making the rounds with strong proclamations.

Kennedy claims that marijuana is now a threat to the alcohol and pharmaceutical industries due to its ability for disruption. He also believes that a $100.0-billion pot stock is on the way. (Sources: “Tilray CEO Sees Cannabis Disrupting Pharmaceutical and Alcohol Industries,” Bloomberg, October 17, 2018; “Tilray CEO says there could be a $100 billion pot stock coming,” CNBC, October 17, 2018.)

Kennedy also said he expects another country to begin the process of recreational legalization within a year. (Source: “Tilray CEO: We know there will be a third country to legalize in the next year,” CNBC, October 17, 2018.)

These are all heady claims that speak to an intense optimism, as one would expect from Tilray’s CEO. If he’s proven correct on one or all fronts, expect to see massive gains from the cannabis industry as each milestone is met.

In the meantime, TLRY stock is unlikely to relinquish its spot as the most volatile marijuana stock, and therefore is not for the faint of heart.

Cronos Stock

Another marijuana stock known for its volatility is Tilray stock’s only compatriot on the Nasdaq, Cronos Group Inc (NASDAQ:CRON).

CRON stock jumped about four percent in early-morning trading today and has climbed about 21% over the past five days.

In a surprising turn of events, the stock’s growth in recent days actually outpaced Tilray, even as the companies followed similar trend lines.

This rise was helped by the company scoring a partnership with the Technion Research & Development Foundation of the Technion – Israel Institute of Technology to conduct research on cannabidiol (CBD) and its uses in skincare products. (Source: “Cronos Group Inc. Partners with Technion Research & Development Foundation for Cannabinoid-Based Skin Care Treatments,” Cronos Group Inc, October 15, 2018.)

CRON stock’s volatility makes it harder to predict compared to, say, Canopy Growth Corp (NYSE:CGC).

Both marijuana companies on the Nasdaq, however, are going to have to demonstrate that there is more to them than just hype as the industry matures (especially Tilray).

TLRY & CRON Stock Performances

The TLRY stock (black line) and CRON stock (blue line) performances from the past week are seen in the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today saw a rebound in the pot stock market as Canada tackles its first obstacles revolving around marijuana legalization.

All things considered, however, October 17 went smoothly and marked the beginning of what is going to be a global trade in pot. Canada, in this case, was the first step on that path.