Marijuana News Today
The marijuana news today is full of attention-grabbing headlines both on and off the pot stock market, but first I’m going to start with perhaps the biggest news: Senate Majority Leader Mitch McConnell will be meeting with cannabis industry executives in California.
The most powerful lawmaker in America has consistently been a thorn in the side of proponents of U.S. marijuana legalization, often refusing to even consider marijuana reform bills on the Senate floor.
That may all change though. And if it does, expect to see an explosion in the marijuana stock market.
McConnell will be attending at least two days of meetings with cannabis-industry executives, small business owners, and advocates in Southern California. The trip is likely going to focus on the SAFE Banking Act, which legislates protection for banks that want to get involved with the pot industry. (Source: “Mitch McConnell meets with pot execs in California, pitched need for cannabis banking reform,” MarketWatch, October 10, 2019.)
Remember that cannabis remains prohibited at the federal level in the U.S. and, therefore, any banks that operate across more than one state would be technically in violation of federal law if they handled money from marijuana businesses.
To be fair, there have been no prosecutions relating to this kind of violation in recent times, but the threat has been enough to ward off some of the more skittish banks.
Furthermore, some marijuana purveyors in states where the drug is legal need to store large amounts of their profits as cash, due to banks refusing to handle the money. That has in turn led to robberies of cannabis businesses in certain parts of the country.
In any case, the SAFE Banking Act would seem to be a logical starting point for McConnell if he was to begin changing course on the weed issue.
After all, the Republican Party portrays itself as pro-business, and this is very much a business issue.
Not to mention that the state that McConnell represents, Kentucky, already has a fair-sized hemp-growing industry, which McConnell indirectly helped establish when he supported the Agriculture Improvement Act of 2018, which legalized hemp at the federal level.
Hemp can be used to make cannabidiol (CBD), and therefore the enactment of the Agriculture Improvement Act of 2018 led to the creation of a legal U.S. CBD market in 2019.
Now, it is unlikely that McConnell will perform a total 180 on the marijuana issue during his upcoming trip, but it’s a start.
If McConnell eventually shifts his position on pot, then we can expect to see the U.S. government follow suit. This man, after all, is arguably the second-most powerful person in the U.S., behind the president.
Marijuana reform in America would undoubtedly fuel massive growth in the marijuana industry and would lead to exponential gains. As such, this is an issue that every marijuana stock investor ought to be following carefully.
The marijuana news today on the pot stock market is not quite as hopeful. Or at least, not in the near term.
Marijuana stocks have plummeted over the past few days after Hexo Corp (NYSE:HEXO) issued a withdrawal of its fiscal outlook for 2020. (Source: “HEXO Corp Provides Preliminary Fourth Quarter 2019 Revenue Results and Withdraws Fiscal Year 2020 Outlook,” GlobeNewswire, October 10, 2019.)
Withdrawing a fiscal outlook usually means a company believes that the next year’s guidance was too high. The result is often investors panicking, and that has been the case with Hexo. Marijuana stocks across the board were hit hard by the news.
HEXO stock was down three percent in early-morning trading today, following a very tough five-day run that saw the stock lose over 30%.
Despite all this, I’m still a fan of Hexo Corp. Yes, I know that may seem crazy, but I firmly believe that this company has the ability to grow strong in the coming years.
After all, since I began writing about Hexo, we’ve seen its stock peak and trough several times.
In 2018, the company neared about $7.00 a share before falling to about $3.00. Then, in 2019, HEXO stock hit almost $8.00 a share before collapsing to $2.75.
The fact is, we’ve been here before with Hexo. And my view is that the stock will rise again.
After all, the fundamentals are all there: a partnership with a large alcohol company, strong supply agreements, and a major U.S. stock market listing.
Sure, things may look bleak now, but I have little doubt that HEXO stock will reach and exceed $8.00 within the next 12 to 24 months.
Another marijuana stock that is in the dumps right now but has huge upside is OrganiGram Holdings Inc (NASDAQ:OGI). OrganiGram stock fell about 12% over the past five days but climbed by more than 10% in early-morning trading today.
Much like HEXO stock, OGI stock is a very strong company with a very similar stock market performance.
Both are marijuana penny stocks with big upside. Both have consistently been considered to be some of the best-valued pot companies, and both stocks have experienced hardships only to bounce back within 12 months.
OGI stock, just like HEXO stock, peaked and fell last year to a similar degree that it did this year. And I have little doubt that it will recover from this fall much like it did in 2018.
For marijuana investors concerned about further drops, that’s a fair worry, but it’s also likely that OrganiGram will attain its former glory within a year or two.
Everything that made OrganiGram stock so exciting before the current marijuana stock correction is still intact. The only thing that has changed is the market attitude, and that’s a fickle beast on the best of days.
Not to mention that OGI stock’s extreme volatility right now means that day traders could win big if they play their cards right.
HEXO & OGI Stock Performances
The performances of HEXO stock (black line) and OGI stock (blue line) over the past week are seen in the chart below:
Chart courtesy of StockCharts.com
With each passing day, more and more progress is being made in the fight for federal U.S. marijuana legalization. The marijuana news today again showed that pot stocks are gearing up for a huge run when pot reform finally comes to the country.
On the flip side, the marijuana stock market continues to struggle, but I think this will only be a passing shadow, with bright days ahead.