Marijuana News Today
In what is sure to be a developing trend this year, the marijuana news today has yet another pot company looking to parlay the U.S. 2018 Farm Bill into a solid footing in the U.S. cannabidiol (CBD) market.
This time it’s Aurora Cannabis Inc (NYSE:ACB) that is looking to jump in on that burgeoning and lucrative market.
You may remember that the Agriculture Improvement Act of 2018, passed in December, legalized the cultivation of hemp on a national scale. A cannabis variant, hemp does not have the psychoactive chemicals seen in marijuana, but can be used to make CBD, which is often associated with curative properties.
CBD, more broadly, has exploded in recent months, with many seeing the potential of the new wellness substance to take the market by storm. Not to mention, CBD has proven restorative effects that can help reduce the use of opiates and sleeping pills.
Aurora COO Cam Battley said the company was looking to enter the U.S. market within the next few months. (Source: “Aurora Cannabis is gearing up to break into the $1.6 billion CBD industry in the US,” Business Insider, January 14, 2019.)
It makes perfect sense that Aurora Cannabis Inc would be hungry to get in on the market. Analysts believe that the CBD market in the U.S. could reach $1.6 billion a year in 2019, while the worldwide value of the CBD industry could hit $22.0 billion by 2022. (Source: Ibid.)
The U.S. farm bill has, of course, opened the way for a great many Canadian marijuana companies to suitably tap into the massive U.S. market.
Canopy Growth Corp (NYSE:CGC) has also been linked to the U.S. CBD market in 2019, while others are sure to follow.
CBD is among the primary medical ingredients in “Epidiolex,” the first U.S. Food and Drug Administration-approved cannabis-derived drug.
This means that CBD may not only take the recreational marijuana market by storm, but—given enough time— could conceivably alter the face of the pharmaceutical industry.
It would be impossible to write about the marijuana news today without examining ACB stock, which has captured headlines two days in a row now.
Yesterday, Aurora’s acquisition of Whistler Medical Marijuana Corp. had the company’s stock surging. Worth CA$175.0 million, the move will see Aurora expand its production capacity and continue with its aggressive acquisition strategy of 2018.
The buy is projected to add a total production capacity of over 5,000 kilograms per year when Whistler’s second location reaches full capacity. (Source: “Aurora Cannabis buying Whistler Medical Marijuana in deal worth up to $175M,” Global News, January 14, 2019.)
Today, of course, we have Battley’s aforementioned signaling of intent to enter the U.S. cannabis market via CBD.
This is another bold move that I very much like, and believe will pay off with big yields if done correctly. After all, the U.S. is the most lucrative market in the world and has yet to be sufficiently tapped due to the federal bans on marijuana.
With the U.S. 2018 Farm Bill changing that, however, and providing a workaround via hemp and CBD, seeing which companies can stake out a stronger claim in the market will help determine winners and losers in 2019.
This market is probably one of the hottest ones to watch for marijuana stock enthusiasts.
The recent run of good news has also benefited Aurora Cannabis stock in the short-term.
ACB stock climbed just over a percent in early-morning trading today. Not a jaw-dropping number, to be sure, but compared to the downturn that many other pot stocks are facing (more on that below), this is a significant win.
The past five days have seen ACB stock surge by nearly 40%, speaking to the company’s strong start in 2019.
One company that initially had a very strong start in 2019 is now seeing its fortunes change in a short, furious burst.
Tilray Inc (NASDAQ:TLRY) was riding high to start 2019, with several winning headlines forcing stock prices higher. But a huge surge over the past several days has finally come crashing down.
As I always warn, when pot stocks jump so high so fast, they are almost always destined to fall with equal rapidity at some point down the line.
Which isn’t to say that the gains are lost, but only that those huge single-day gains are more often than not flashes in the pan rather than sustainably, long-term wins.
TLRY stock found itself down big in early-morning trading today, falling by more than 12%.
But even that fall has not been enough to counteract the company’s impressive performance over the past few days, with Tilray stock still up about eight percent since last week.
While I still view Tilray stock as a strong pick, these wild swings are not unexpected. Day traders should take note while long-term buyers should weather through them for the higher gains on the other side.
ACB and TLRY Stock Performances
The performances of ACB stock (black line) and TLRY stock (blue line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
The marijuana news today has us again excited about the prospects of the American CBD market, while the pot stock market takes a hit today.
TLRY stock is down big while ACB stock continues to thrive. But all things considered, it’s shaping up to be a good year for pot in 2019.