Marijuana News Today: The U.S. Senate Could Help Jump-Start Pot Stocks
Marijuana News Today
The marijuana news today has us looking to the U.S. Senate for a long-awaited hearing that could help spur huge growth in the marijuana sector.
The Senate Committee on Banking, Housing and Urban Affairs will hold a hearing on cannabis banking on July 23. This marks the first time the Republican-controlled Senate has agreed to examine the Secure and Fair Enforcement Banking Act of 2019 (SAFE Banking Act), which would allow banks to offer services to pot companies in compliance with state law. (Source: “Pot Policy Review in U.S. Isn’t Helping Stocks: Cannabis Weekly,” Bloomberg, July 21, 2019.)
At the moment, many marijuana companies are cut off from bank capital due to the federal regulations making it too risky for banks to provide loans to pot businesses.
As a result, most of the funding for pot companies has to come from investment capital, limiting the ability of weed companies to make important, high-cost expansions. This, in turn, has stunted pot stock growth.
“On the legislative front, it is evident that the politics of cannabis is undergoing a transformation that is almost unparalleled in Washington,” said Jaret Seiberg, analyst for Cowen Inc (NASDAQ:COWN), one of the top investment banks that tracks the marijuana business.
“This has gone from an issue that Capitol Hill did not take seriously to one that is driving legislation and elections, and this all happened in the last two years.” (Source: Ibid.)
While the legislation isn’t close to being passed, the fact that it’s finally getting a Senate hearing is a big deal in and of itself.
As I have said before, the future of the marijuana industry will be decided in the various parliaments and congresses of the world, specifically the U.S. Congress.
Whether pot legalization is initiated through direct referendums or traditional legislative channels, marijuana stocks are going to have their future outlook be dramatically reshaped depending on how fast major markets can legalize the drug.
The U.S. is potentially very close to becoming the next country to push through recreational marijuana legalization.
While the SAFE Banking Act will help spur stock prices in the near term if it gets passed, the next president may be the first in modern American history to have a pro-pot agenda.
Almost all of the major front runners for the Democratic Party presidential nomination have come out in support of marijuana reform to one degree or another. While they still have to overcome sitting President Donald Trump (who has been ambivalent on weed at best), this is still a huge boon to the marijuana industry.
While several presidents have admitted to having partaken of marijuana, none have come out in support of marijuana reform the way the current cohort of Democratic presidential hopefuls have.
The end result is that, in just over a year, we may see a sitting president with a very weed-friendly policy agenda that would, if successful, see marijuana legalized in the U.S. and send pot stocks soaring.
CURLF Stock
The marijuana news today is still buzzing following Curaleaf Holdings Inc’s (OTCMKTS:CURLF, CNSX:CURA) acquisition of privately held Grassroots for $875.0 million in a cash-and-stock deal. (Source: “Cannabis Canada: How a U.S. company suddenly became the biggest pot firm in the world,” BNN Bloomberg, July 17, 2019.)
The deal is set to make Curaleaf Holdings the largest marijuana company in the world by revenue, according to the company’s press release.
CURLF stock is up another three percent in early-morning trading today, a strong showing following the company’s very impressive last five days, when it gained nearly 25%.
The massive spike in CURLF stock comes at a time when many other pot stocks have been struggling with the current marijuana market pullback.
Following the acquisition, Curaleaf Holdings will be in 19 U.S. states and will grow the number of its national dispensaries to 68 nationwide. The company will also increase its pro forma 2019 revenue to $256.0 million.
This comes on the heels of the Curaleaf’s announced intentions to look into the European market in the near future. The company’s overall plan seems bent on expansion and growth, something that I’ve long championed in the marijuana industry.
As such, while Curaleaf stock is looking grand right now, the stock could just be getting started when it comes to gains.
After all, Curaleaf is now in a very enviable position; it’s among the largest marijuana companies in the U.S. and is continuing to expand. It’s also one of the few publicly traded pot companies that has access to huge swaths of the U.S. legal marijuana market.
On top of that, there are still events in the company’s future that could help spur stock growth, like a move to the Nasdaq or New York Stock Exchange. In either event, investors could expect to see CURLF stock jump once more.
I’m very bullish on Curaleaf Holdings Inc, as it provides investors with a strong entry into the U.S. market while also leaving open the possibility of further growth beyond American borders.
HEXO Stock
Something I’ve been watching intently has been the recent performance of Hexo Corp (NYSE:HEXO). One of my favorite marijuana penny stocks, it has fallen on tough times. But in my mind, that’s going to set it up for future gains down the line.
HEXO stock fell another percent in early-morning trading today, and it has lost four percent over the past five days. More importantly, it has dropped below $5.00 a share. This is a very important threshold.
Despite that, Hexo remains a strong company. Sure, the marijuana stock market downturn has hit it hard, but there is nothing specific to HEXO stock that makes it weak. Instead, it’s taking its lumps much like the other companies in the industry.
More importantly, I believe that, at less than $5.00 a share, this stock is a steal.
Hexo Corp continues to have one of the strongest marijuana supply agreements in the game (a very lucrative deal signed with the province of Quebec), and it has a partnership with the major alcohol company Molson Coors Brewing Co (NYSE:TAP).
Not to mention that many analysts pegged HEXO stock as undervalued before the pullback; now we have a stock that may very well be among the best bargains out there.
With that in mind, marijuana investors may facing a great opportunity. While I believe that a further decrease in value is likely in store for the stock, buy-and-hold investors could see big wins. Other investors may want to wait for the nadir, but that runs the risk of missing a large spike in share value that I am convinced will hit before 2020.
And my track record with HEXO stock is quite strong: since featuring the stock about a year ago in my paid newsletter Marijuana Millionaires, it has yielded investors 55% in gains.
CURLF and HEXO Stock Performances
The performances of CURLF stock (black line) and HEXO stock (blue line) over the past week are seen on the chart below:
Chart courtesy of StockCharts.com
Analyst Take
The marijuana news today, as is customary, had us looking at the United States. What happens in the U.S. Congress will determine the future of pot stocks the world over.
Right now, things are looking very positive for the marijuana industry as the Senate begins the important process of self-reflection and hopefully loosens the pot prohibition laws on the way to an eventual total repeal of those laws.
