Marijuana News Today: How Retail Privatization Could Be a Huge Boon for Marijuana Stocks
Marijuana News Today
The marijuana news today features more political good tidings for marijuana stocks as Canada’s most populous province—Ontario—is changing course and going to allow private retail marijuana shops to open up for business come October 17.
This development is a big win for marijuana stocks as the previous plan had the government controlling all marijuana storefronts. This new model would allow marijuana businesses to open up shop and peddle their wares without having to go through a government middleman. (Source: “Ontario said to announce big change in plans for marijuana retailing under Doug Ford,” Financial Post, July 27, 2018.)
The shift is coming about as a new government takes over in Ontario, replacing the Liberals who had previously planned to have a monopoly on pot sales both in-person and online, not unlike they do with alcohol through their LCBO chain.
The initial plan hoped to have 150 brick-and-mortar stores open by 2020, with 40 by legalization.
Considering the size and population of Ontario, that would seem to be on the smaller side. If the new proposal comes through that favors private enterprise, we may see a proliferation of marijuana storefronts across the province, increasing access and potentially leading to much higher sales for marijuana companies. And, of course, higher sales means higher profits, which means higher stock values.
While nothing has been proposed in writing yet, the current mood seems to be one that is angling toward a more business-friendly approach to marijuana in the province. The new Conservative government running the province has said as much on numerous occasions.
The move will not only lead to potentially better sales for marijuana companies, but also add a new dimension to the competition between these pot stocks.
For instance, these pot retailers could open up their own brand of marijuana stores or perhaps even multiple brands catering to different clientele. It opens up another opportunity to appeal to customers and puts less of an emphasis on winning those all-important government supply contracts.
The government will still hold sway over the distribution of marijuana to stores, as well as oversee online sales. But the dissolution of the government monopoly on marijuana is a big boon to marijuana stocks and something that will only help them in the long-run especially as the Canadian marijuana legalization date nears.
Marijuana Stock Market Performance
The marijuana news today on the pot stock market is less than bright.
While early-morning trading today got off to a decent start, the week overall has been a poor one for the marijuana stock market.
In the following stock chart, CRON stock is in black, APHQF stock is in blue, and MEDFF stock is in red.
Chart courtesy of StockCharts.com
Cronos Stock News
Cronos Group Inc (NASDAQ:CRON) is up about two percent today in early trading, but on the week the company has fallen about three percent overall.
This is in keeping with the industry in general as we’re seeing the downtrend continue to wreak havoc across the pot stock market.
Many companies—while not seeing dramatic drops in value—are instead experiencing a slow drain, dropping two to five percent per week over the past month or so.
Much of this is in response to the massive spike in value that many companies experienced following the announcement of the Canadian marijuana legalization date.
CRON stock, however, was a bit of an outlier, managing to tread water and see some gains, or at least only minimal losses, in July.
But that tune has since changed and now CRON stock finds itself struggling like much of the rest of the industry, albeit to a lesser degree.
Cronos stock has always been a bit of a maverick in the market, often having its own trends that don’t always follow its competitors. But now the company seems to have fallen into line, and not in a good way.
Aphria Stock News
Another company that has struggled in the downturn is Aphria Inc (OTCMKTS:APHQF, TSE:APH).
The company, however, is surging in early morning trading, up nearly four percent just after markets opened.
While not enough to save Aphria stock’s week, the company is now down only about two percent to close our July, which is a good deal better than many other marijuana stocks.
Of course, Aphria stock has been one of the most consistently weak performers on the year, dropping over 43% year-to-date.
Aphria stock had me convinced for much of the year that a resurgence was on the way, but that recovery never manifested. Instead, we’ve seen Aphria stock generally fall, punctuated by small bursts of life that proved unsustainable long-term.
While I’m not saying there’s no hope for Aphria stock, I do believe that it is one of the weaker companies on the market right now, even with its strong surge this morning.
MedReleaf Stock
To close out the bad marijuana news today on the pot stock market we have MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF).
The company is down over six percent on the week and unlike Cronos stock and Aphria stock, early morning trading today holds no good tidings for MedReleaf stock.
MedReleaf stock was one of the hottest buys over the past few months as Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE;ACB) announced that it would be acquiring the company in the biggest deal in marijuana history.
While that negotiation is still ongoing, MedReleaf stock saw a huge boost to its stock value in the aftermath. That boost has since dissipated as the marijuana pullback we’re experiencing has done its damage to MedReleaf stock.
Having said that, of all the pot stocks in our marijuana news today, I’m most hopeful for MedReleaf stock.
I believe that the closer we get to the deal between Aurora and MedReleaf, the more interest will be rekindled in the company and lead to a potential surge in value.
As such, I would watch the news (and stay with Profit Confidential) to hear about any developments in the deal that could push MedReleaf stock back into gains.
Analyst Take
The marijuana news today, as has been the case for a few weeks now, shows promise on the political and legislative front while the pot stock market continues to struggle.
This is very much in keeping with what I predicted earlier in the year: We’d see an up-and-down rollercoaster as we approached Canadian marijuana legalization.
The push and pull of hype versus correction will continue until we hit the marijuana legalization date. At which point, I expect marijuana stocks to surge, face another correction, then balance out and see steady gains as investors settle into a more predictable pattern.
Until then, expect a good bit of volatility.
