Marijuana News Today
In the marijuana news today we have the Tilray Inc (NASDAQ:TLRY) stock price up again, surging in early-morning trading. Meanwhile, the Canadian marijuana legalization picture has gotten a little clearer after Ontario revealed its plan for private-sector cannabis stores.
A press conference that the Ontario government held yesterday gave much-needed details concerning how marijuana will be handled in Canada’s largest and richest province. For marijuana stock investors, the details are a mixed bag.
First, the good news: the plan allows for an unlimited number of privately owned storefronts that sell recreational cannabis. However, due to the reworking of the province’s plan, legal cannabis stores in Ontario won’t open until April 2019, several months after Canadian marijuana legalization hits on October 17.
Nevertheless, this was a major win for marijuana stocks, as it allows companies to have unfettered access to the market in terms of real estate.
The bad news is the new legislation’s restrictions on licensed pot growers; they will only be permitted to own a single store each at an Ontario production site.
There’s also the possibility that the legislation will limit how many licenses a single entity can hold, but that is still up in the air.
“We want to open up the marketplace,” said Ontario Finance Minister Vic Fedeli. “This is an opportunity for small business to get involved. We want to have as many participants as possible be involved.” (Source: “Ontario proposes capping number of stores for cannabis growers, open market for recreational sales,” The Globe and Mail, September 26, 2018.)
Furthermore, municipalities within Ontario that want to ban cannabis stores post-legalization only have until January 22, 2019 to decide.
What This Means for Marijuana Stocks
Ontario is a tricky case for marijuana stocks. The previous government had designed a public monopoly system for legal cannabis sales. That idea was swiftly shuffled out, however, when a new political party took over.
The current government has replaced the public monopoly plan with a private sector-friendly one. This is a huge boon to marijuana companies because it will allow them to open up their own storefronts across Canada’s wealthiest province.
But then the news hit that they wouldn’t be able to open those stores until April 2019—a significant delay in the short term—and now we also have new restrictions on licensed cannabis growers.
While this is still a more marijuana stock-friendly policy compared to the public monopoly one, ultimately this new proposal favors—in some cases—smaller businesses.
These smaller businesses naturally won’t be trading on the public stock market due to their size, so that potentially affects some of the larger marijuana businesses’ market caps.
It’s by no means a calamitous development, but it is going to make life just a little more difficult for big marijuana companies operating in Ontario.
Overall, I’d rate the marijuana news today as positive, even though some of the proposed legislation will present obstacles to the bigger marijuana companies.
Once again, Tilray stock is marching to its own drum, up big while many other pot stocks have fallen.
TLRY stock jumped by about 14% in early-morning trading today as most pot stocks saw a pullback.
This is precisely why I’ve come to label Tilray as the best short-term play in the marijuana market: you never know what you’re going to get. Well, that’s not entirely true; you know you’re going to get a wild swing, but what you don’t know is the direction.
Tilray stock continues to confound the market. With this much volatility at play, there’s simply no confident way to predict what the stock’s movement will be. This, naturally, makes Tilray an attractive option for day traders and shorters.
The massive swings both up and down are going to persist for some time, so for investors who don’t mind a little bit of nervous anticipation and guesswork, there’s still plenty of time to cash in.
For those looking to make long-term plays in the market, however I’d steer clear of TLRY stock for now.
The only other pure-play marijuana stock on the Nasdaq, Cronos Group Inc (NASDAQ:CRON), has also been defying the odds today.
While the stock was breaking even today in early-morning trading, most marijuana stocks of a similar size fell about two to five percent, making CRON stock a winner so far.
Cronos stock, much like Tilray, has often forgone industry trends and has risen and fallen on its own terms.
Much of that is the result of Cronos being on the Nasdaq. This gives it a special position as a beaming target for American investors, which is often enough to send CRON stock on its own path—versus the majority of other pot stocks, which are registered on the over-the-counter (OTC) and Canadian stock exchanges.
For those looking for a lesser degree of volatility, CRON stock is the tempered alternative to Tilray. However, it is worth noting the risks.
TLRY & CRON Stock Performances
Both CRON stock (black line) and TLRY stock (blue line) are down big over the past five days, as seen in the chart below.
Chart courtesy of StockCharts.com
It has been a gray day in the marijuana news today so far, with “good” and “bad” being a matter of perspective.
On the pot stock market, most stock prices are down while Tilray stock has been soaring.
Meanwhile, in Ontario, Canada, the provincial government has unveiled a plan that will likely benefit marijuana stocks in the long run, even if there are a few obstacles.
With Canadian marijuana legalization coming on October 17, I expect the cannabis industry to begin ramping up its gains as the date gets closer.