Marijuana News Today: Tilray Stock Down, Potential Last-Minutes Changes in Canadian Marijuana Legalization

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iStock.com/FabrikaCr

Marijuana News Today

The marijuana news today sees Tilray Inc (NASDAQ:TLRY) stock take a dive while potential last-minute changes in Quebec could change the outlook of the pot industry in Canada’s second-largest province.

The Canadian federal government has officially said that it will not interfere with provinces when it comes to setting the legal age for consumption of marijuana after it is legalized. (Source: “Feds won’t interfere if Quebec raises marijuana consumption age to 21,” CTV, October 3, 2018.)

The provinces already regulate the legal drinking age, so it stands to reason that this would also be something left to the provinces to decide.

Quebec, Canada’s second-most populous province, is now considering raising the legal age of marijuana consumption to 21 from 18.

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This comes on the back of a provincial election that saw the ruling party beaten, leading to a change in government, and potentially policy changes regarding marijuana.

The outgoing provincial government of Quebec belonged to the Liberal Party, putting it in close touch with the ruling federal Liberals.

While the changes are not likely to extend beyond the age limit—at least not immediately—the raising of the legal age from 18 to 21 could have a pretty sizable impact on the future of sales in the province.

What This Means for Marijuana Stocks

It’s important to remember that Canadian marijuana legalization does not mean there will be no further legal changes regarding cannabis after legalization comes into effect on October 17.

There’s still a lot that can be amended when it comes to marijuana policy in Canada.

We’re seeing that play out in real time in Canada’s largest provinces: Ontario and Quebec. Both provinces had recent elections that saw their Liberal governments voted out, leading to dramatic shifts in pot policy.

In Ontario, the change in government led to a radical altering of the public monopoly plan for cannabis sales. The province is instead adopting a private-sector strategy that would allow unlimited private marijuana storefronts but limit the number of stores to one per producer.

This will have a huge impact on the future of marijuana in Ontario. Considering this is the largest and richest province in Canada, the move has had a massive impact on the outlook for the marijuana industry in Canada, mostly for the better.

While the limitations on storefront ownership will hit some of the larger companies hard, ultimately the ability to market their unique brands via storefronts rather than rely on a public monopoly allows for greater competition in the marketplace. This will incentivize unique branding and other promotions that will likely help sales and reduce costs for consumers.

These last-minute changes are, however, still concerning to see so close to the legalization date.

Tilray Stock

Tilray stock is once more on the move, only this time it’s headed into the red.

TLRY stock fell by about five percent to start the trading day, but it then rallied several points from its morning nadir.

It’s almost always impossible to predict hour-to-hour how TLRY stock will perform, but I imagine today will be a down day for the company.

Tilray stock continues to be one of the most volatile plays in the market, having gained as much as 25% over the past five days, only to see a lot of that gain disappear, putting it at about a 12% gain on the week.

These swings are par for the course when it comes to Tilray stock, and we should expect them to continue for some time yet.

Tilray continues to draw a massive amount of interest from U.S. investors, but many of them are becoming wary of an asset bubble, leading to a push-and-pull dynamic that sees the share value swing wildly, but often ending up with large gains.

Hexo Stock

Since the marijuana news today mentioned Quebec, let’s focus on a marijuana stock that plays a prominent role in the province: Hexo Corp (OTCMKTS:HYYDF, TSE:HEXO).

Across the cannabis industry, we have been seeing a downturn. However, Hexo stock managed to mark about a one-percent gain to start the day. While nothing to write home about, many other marijuana stocks were down about two to five percent in early-morning trading, making Hexo stock the outlier.

Hexo, of course, had a surge earlier in September, when activist shareholders released a note saying the stock should be much more highly valued.

The company has a supply agreement with Quebec. And more importantly, Hexo stock was bolstered by the partnership it scored with Molson Coors Brewing Co (NYSE:TAP) during the summer to create cannabis-infused beverages, a very hot segment of the market right now.

TLRY & HYYDF Stock Performances

TLRY stock (black line) and HYYDF stock (blue line) have had very different weeks, as seen in the chart below.

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today shows that the volatility around pot isn’t unique to the stock market; political changes are rapidly developing as well.

While we don’t know whether Quebec will go through with this age limit raise, it is likely that the new provincial government will move to push the age limit higher.

This is going to have an impact on sales in the province, although the extent of that impact is something we’ll have to evaluate at a later date.

In the meantime, marijuana stocks had a down day, but expect share prices to perk up in the coming weeks as Canadian legalization nears.