Marijuana News Today
The marijuana news today bears good tidings as a new report from Canadian Imperial Bank of Commerce (NYSE:CM), otherwise known as CIBC, came out in strong support of the legal marijuana industry.
CIBC is one of Canada’s “Big Five” banks, so it represents a huge influence on investors in the country. With the bank’s recent report being hot on marijuana stocks, that may open the door for more institutional investment in the sector. (Source: “Legal marijuana is set to outsell liquor in Canada by 2020,” Business Insider, May 9, 2018.)
The report states that Canadians will likely buy over 800,000 kilograms of legal marijuana by 2020. It estimates that the legal marijuana industry in Canada will hit $6.5 billion by 2020.
For comparison, the liquor industry came in at about $5.1 billion in 2017.
Another nugget that makes this report even more favorable to marijuana bulls is that the vast majority of sales are going to come from the fast-approaching recreational market.
CIBC forecasts that the recreational market will account for about 95% of sales, versus five percent for medical marijuana.
The bank further predicts that over $1.0 billion in earnings will be generated from marijuana sales in the private sector, with most of that going toward weed cultivators and producers.
This is fantastic news for any marijuana bulls who have been watching the market.
One of the big gaps in the weed industry is the lack of institutional investors. For a long while, banks were reluctant to get in the marijuana game. And they were not without reason.
The industry is legally complicated, with countries across the world having a variety of hyper-specific laws in place governing the drug. This makes entering each new market a bit of a headache.
On top of that, you have countries like the United States, which have contradictory legal positions on marijuana.
With a federal ban, but legalization in certain states, recreational marijuana in the U.S. operates on faith. The federal government has the legal authority to shut down all marijuana operations tomorrow, if it so chose.
Of course, that would be a lot more difficult in practice than on paper. But still, these types of barriers have prevented institutional investors from pumping capital into the U.S. marijuana market.
The marijuana news today demonstrates that more research is being undertaken by big financial institutions. Research means allocation of resources, and an allocation of resources means they are taking a serious look at the industry.
More reports like the one from CIBC are needed in order to foster trust from institutional investors. But there’s still a long way to go before banks will go whole-hog on marijuana stocks.
Consider that Toronto-Dominion Bank (NYSE:TD) was allowing its staff to only recommend three specific marijuana stocks to investors, ostensibly due to the legal troubles that the drug faces.
The CIBC report represents progress, and that makes the marijuana news today particularly bright.
Aurora Cannabis Stock
In stock-movement marijuana news today, it’s one of the quieter days we’ve seen in a while.
Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) has remained quite static in its stock movement over the past few days, making May 2018 one of the more uninteresting months in terms of stock movement.
Chart courtesy of StockCharts.com
But Aurora is still making waves, due to its proposed takeover of MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF).
While still in the rumor stage, the Aurora-MedReleaf merger did manage to capture a good many headlines last week.
Both companies confirmed that talks had taken place, but neither one was willing to comment on how serious these talks were.
If they were just exploratory offers, this may be the last we hear of the deal. If, however, these talks have substance to them, we’re likely to see big movement on the Aurora stock chart in the near future.
Following the rumors about a deal with Aurora, MedReleaf stock has been on an absolute tear.
As is often the case, when a company is rumored to be the target of an acquisition, the stock price shoots up. Here, we saw MedReleaf stock jump by nearly five percent over the past week.
Considering that the marijuana market has been rather quiet in May, that represents a good uptick in stock value.
MedReleaf stock is in an enviable position. The rumors of the takeover allow it to garner investor interest without any firm commitments or even substantial evidence indicating that a merger is in the works.
MedReleaf is holding all the cards in the deal and, should it look to complete a merger, I imagine that MedReleaf stock will come out on top over Aurora stock. Both, however, are likely to receive a boost if the price of the acquisition is not too high.
The darling pot stock of May, Aphria Inc (OTCMKTS:APHQF, TSE:APH) has taken a bit of a dive today, down about one percent after having leaped almost 15% over the past five days.
The thing to watch with Aphria stock is whether the company has officially hit bottom. Has it lost enough value that investors are once more willing to consider the stock long-term?
With claims of overvaluation abounding in the marijuana industry following the massive run at the end of 2017, Aphria stock was one of the hardest hit, losing over 40% of stock value this year.
But it appears that this drop may have been enough to spark renewed investor interest in APH stock. With summer approaching and the marijuana industry due for a rebound, Aphria stock may be poised for big gains in the next few months.
The marijuana news today shows a stock market that is rather static, while positive developments continue to stack up in favor of the industry.
The CIBC report is huge, not so much because of what it says, but rather what it represents.
As institutional investors continue to open up to the idea of the marijuana industry, the injection of capital and the proliferation of confidence will both be huge boons for marijuana stocks.