Marijuana News Today
We have big news coming out of Europe in the marijuana news today, as the European Union (EU) parliament voted on a resolution to encourage the adoption of medical marijuana regulation across the largest economic market in the world. (Source: “European Parliament Passes Cannabis Resolution, Joins WHO In Supporting Medical Marijuana,” Forbes, February 13, 2019.)
Now, before we get ahead of ourselves, there are some very important caveats.
First of all, this is not an EU marijuana legalization law. In fact, the EU parliament is, despite being the democratically elected body of the organization, often considered one of the weaker arms of the EU.
Furthermore, the EU is limited in its ability to enforce laws across the borders of its member states, usually only having the power to regulate the single market that they share through monetary policy with the euro and other mechanisms.
However, despite those corollaries, there’s still a lot to be excited about, namely that the EU has basically adopted a resolution throwing its support behind medical marijuana. (Source: Ibid.)
The EU has a population of about 500 million people and a gross domestic product (GDP) on par with the United States. If we were to see a major push across the EU to legalize medical marijuana, the spike in stock prices would be similar to that of a U.S. marijuana legalization push—which is to say, it would be massive.
So for marijuana bulls, this is great news.
This is only the groundwork, but it’s a foundational piece of progress that will likely lead to a greater degree of acceptance for marijuana across the single market. And that’s where things get really interesting.
While the marijuana trade is a global one, each country tends to have its own regulations and laws regarding pot.
If the EU adopts some sort of wide-reaching, universal policy when it comes to marijuana, our favorite pot stocks would have a much easier time gaining access to the wider market, rather than having to conform to each individual state’s laws.
This would see marijuana stock prices easily grow by dozens—maybe even hundreds—of percentage points.
It’s worth noting that medical marijuana sales have begun to flag across the already open markets. If the EU opens up for business, this would be a shot in the arm for medical marijuana stocks.
The EU’s move came following the World Health Organization (WHO) recommending that marijuana be rescheduled.
The takeaway here is that the global marijuana market is expanding each and every day. If the EU finds its teeth on the issue and is able to encourage the widespread adoption of medical marijuana laws, I expect that the jump in share prices would not be unlike the lead-up to Canadian marijuana legalization.
Watch out for any news on this front, as it could be the biggest event in 2019 for pot stocks.
Despite the excitement on the political side of the marijuana news today, the pot stock market was anything but exciting this morning.
Most pot stocks saw little or no movement to start the day, following what was an overall downturn in the marijuana industry over the past several days.
Cronos Group Inc (NASDAQ:CRON) is one of the few companies to have seen any gains at all, jumping a little over a point in early-morning trading today. CRON stock, however, is down about three percent over the past five days.
This is a consolidation period, however, as the massive gains in January are going to be offset somewhat by a slowdown or a correction. So far, we’re seeing a modest slowdown, which is the better of the two options.
This could continue on for a few weeks or a month, but I expect that we’ll see gains return before then.
Of course, the industry could also take a wider turn by way of a correction due to the massive jump pot stocks experienced in January, but I don’t believe that will be the case. If a correction was in the near future, I feel we would have felt it by now.
At the same time, good news is always potentially around the corner, ready to spark gains in the industry.
Aurora Cannabis Inc (NYSE:ACB) dropped about 0.5% in early-morning trading today, and finds itself down eight percent over the past five days.
The drop is the result of a slightly disappointing financial report (but one that I believe ultimately signals growth moving forward).
Net revenue hit CA$54.2 million, up 83% from the last quarter and a whopping 363% from a year before. (Source: “Aurora Cannabis Announces Financial Results for the Second Quarter of Fiscal 2019,” Aurora Cannabis Inc, February 11, 2019.)
While those numbers may seem stellar, they weren’t all that unexpected. Canadian marijuana legalization helped spark a huge sales boost, as you would expect.
The problem is that Aurora also registered huge losses. Despite the massive surge in its revenue, the company saw a loss of CA$237.8 million in the quarter. A year ago, it had profits of CA$7.7 million. The previous quarter had the company netting CA$105.5 million.
Ultimately, investors were less than pleased with the numbers. They weren’t bad enough to sink ACB stock too badly, but the quarter still stands out as a missed opportunity for big gains.
Another company experiencing little to no movement to start the day, Canopy Growth Corp (NYSE:CGC) has one key difference: its quarterly report is set to be released today.
I’ve been very positive about Canopy Growth stock this year, and I believe that the company’s quarterly report could be a huge boon to the company.
But there is some risk there. If the company shows massive losses like Aurora did, expect CGC stock to fall.
On the flip side, Canopy Growth will almost certainly show massive revenue gains. Without any mitigating factors, that should be enough to drive growth in its stock price.
Analysts are anticipating that Canopy Growth Corp was likely the biggest winner of the Canadian marijuana market, capturing a good chunk of the market. Some are putting that number as high as 30% and claiming that the company is the largest cannabis provider in Canada so far. (Source: “Canopy expected to capture biggest share of Canadian pot market,” BNN Bloomberg, February 14, 2019.)
CRON, ACB, and CGC Stock Performances
The performances of CRON stock (black line), ACB stock (blue line), and CGC stock (red line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The marijuana news today featured monumental developments in Europe—and boredom on the stock market.
Still, things are heading in the right direction, and if the EU enacts any sort of concrete laws regarding marijuana, expect the pot stock market to be anything but boring.