Marijuana News Today: U.S. CBD Market Expands as Cannabis Legalization Stalls

Marijuana News Today
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Marijuana News Today

The marijuana news today is bittersweet: CannTrust Holdings Inc (NYSE:CTST) is expanding into the U.S. via cannabidiol (CBD) but marijuana legalization is faltering in several states.

First, the bad news. Reports are coming in that the pot legalization bill in New York State is now dead. Or at least for now.

While there have been some conflicting reports on just how dead it is, by and large the consensus is that marijuana will not be legal in New York state by 2020.

This failure is especially surprising, considering the support that the legalization bill had from key political figures in the state, like longtime Governor Andrew Cuomo. That support was a departure from Cuomo’s previous position on pot, with his change of heart seemingly providing the momentum necessary to see a bill passed.

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Neighboring New Jersey has also recently had trouble with marijuana legalization, dropping the ball in a similar way as New York.

Many of these states’ problems stem from the specifics of cannabis legalization.

One topic that there has been fighting over is where the profits will be shared (e.g. with under-served communities, with communities disproportionately affected by the war on drugs, with the education system, etc.).

Another point of disagreement is on how to resolve prison issues, like what to do with people who are incarcerated for low-level marijuana crimes—a tragedy made all the more egregious considering that the drug is on the cusp of being legalized.

These are important issues that are not easily solved, with entrenched positions on both sides of the debate.

Proponents of marijuana legalization, if it’s to move forward in both states, will have to find a way to bring opposing sides together and compromise on a solution that, if not pleasing to everyone, is at least palatable.

American politicians, however, have not exactly excelled at bipartisanship or compromise in recent years.

For pot stocks, this is a hard but not crushing blow. Both the New York and New Jersey marijuana markets would have made nice additions to the global marijuana trade, but overall, they are small fish when compared to what every marijuana company is eyeing: federal marijuana legalization.

Still, opening these states up for business would have helped smooth along the federal legalization process. Not to mention that it would also allow pot producers to establish foundations in key east-coast locales in anticipation of nationwide legalization.

The flip side to these legislative stalls in New York and New Jersey is that they by no means indicate that marijuana is doomed in the two states. Instead, lawmakers will have to go back to the drawing board and try again next year with a new proposal that hopefully can get passed.

CTST Stock

The other major headline in the marijuana news today has to do with CannTrust Holdings. It’s going to be one of the first Canadian marijuana companies to break into the American market.

CTST stock soared a whopping nine percent in early-morning trading today, while over the past five days it has seen a three percent gain as the stock market finally begins to emerge from its mid-June slump.

CannTrust stock was the beneficiary of the company’s announcement that it was about to gain access to 3,000 acres of farmland for hemp production in California via a deal with Elk Grove Farming Company, LLC. The joint venture will be split evenly between the two companies. (Source: “CannTrust Establishes U.S. Operations,” CannTrust Holdings, June 19, 2019.)

The deal will see CannTrust Holdings sign a long-term lease for farmland and begin producing CBD for consumption in California. While federal U.S. restrictions on marijuana make international trade nearly impossible, CBD has pretty much been legalized across the country and many Canadian pot producers are keen on finding a way to integrate themselves into the booming U.S. market.

CannTrust Holdings says it sees this expansion as the first step toward exploiting the larger U.S. market in the future, which would see even further growth for CTST stock.

Considering that the last CannTrust Holdings financial report was very positive, as long as expectations aren’t juiced too high by the expansion news, we can expect a CBD sales boost to directly impact the company’s quarterly reports to good effect.

Which is to say that the future is very bright for CannTrust stock.

TLRY Stock

Another company that is looking strong lately is Tilray Inc (NASDAQ:TLRY). Tilray stock climbed by 3.5% in early-morning trading today, while over the past five days it has climbed by about the same amount.

For those of you who have been following this column closely, you’ll know I haven’t exactly been positive about TLRY stock. But it appears that $40.00 was the lower limit of the stock’s valuation. It seems that the stock has finally bottomed out and may be on track for future gains.

I wouldn’t shout it from the rooftops just yet, however, because Tilray stock has had periods of success before tumbling back down.

TLRY remains one of the most volatile marijuana stocks. That said, there is reason to believe that this is finally the nadir for the stock, and investors may have restored confidence in the company.

With that in mind, I’d suggest a wait-and-see approach to Tilray.

CTST and TLRY Stock Performances

The performances of CTST stock (black line) and TLRY stock (blue line) over the past week are seen on the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today has us watching the U.S. marijuana market very closely.

On the one hand, we have delays to marijuana legalization in two major states that were supposed to have pot legalization on the books in 2020. That appears to be a virtual impossibility at this stage, which is disappointing for marijuana stock bulls.

On the flip side, marijuana companies are increasingly engaging with the U.S. market and that is going to be a huge boon for them.

Considering that many companies have claimed to be looking into the U.S. CBD market, expect those heavy hitters to be jealous of CTST stock’s big gains today and want to replicate that jump for themselves.

Overall, things are looking up for the cannabis stock market after a tough time in May and June. While not guaranteed, it appears that the market is ready for a reversal of fortunes.