Marijuana News Today
With the recent boom we’ve seen in pot stocks, the marijuana news today details how Wall Street has never been more interested in getting involved in marijuana than it is today.
One thing that every nascent industry needs is a large injection of capital in the early stages to fund development. It makes sense. It’s Business 101; you can’t make money without selling a product, but you can’t produce and sell said product without having money at the start to build the requisite infrastructure.
That applies on the macro scale as well. Make no mistake, we are still very much in the beginnings of the marijuana industry. Pot stocks have only just begun to tap into the true potential of what is a global industry in the making.
As such, they’re going to need a large sum of money to afford this global expansion. As it stands, companies have been doing so piecemeal, entering markets selectively and finding alternative routes to funding, primarily because Wall Street has for a long time been wary of the marijuana industry.
On top of the built-in stigma of having been illegal for decades, pot also faces the issue of being technically illegal across the entire U.S., according to federal law.
Those factors have combined to make Wall Street investors skittish when it comes to bud.
But there’s only so long that traders can stay away from what is quickly becoming a gold-mine market.
Marijuana stocks are jumping year-over-year by triple digits and have been doing so far a long while now. When an industry registers those gains, it’s impossible for Wall Street to ignore that forever. And that’s exactly what we’re seeing now.
U.S. interest in marijuana is at an all-time high, as global spending on cannabis is set to hit $32.0 billion by 2022. (Source: “Wall Street Interest in Marijuana Is at All-Time High,” Bloomberg, September 4, 2018.)
The industry hosts more than 200,000 workers. This is big business.
And now we’re seeing a rapid expansion in how the industry is being developed.
From companies that are turning cannabis into a hot new pharmaceutical product, to genetically engineering marijuana in a lab (more on that below), to cannabis-infused beverages…innovations abound in an industry already ripe with growth opportunities.
The marijuana news today on the stock market is still being very much colored by yesterday’s movement when Cronos Group Inc (NASDAQ:CRON) signed a $122.0-million deal with Ginkgo Bioworks Inc. to genetically engineer the active compounds found in marijuana. CRON stock gained double-digits by end of day trading yesterday, and has a wild ride to start Wednesday.
The deal sees the two companies come together in order to extract the DNA from cannabis plants that produce valuable substances and chemicals.
But more importantly as far as CRON stock is concerned, this is a tech innovation in a sector that could use it.
It’s like going into “a foot race with a Formula One race car,” Mike Gorenstein, chief executive officer of Toronto-based Cronos, said in an interview with Bloomberg. (Source: “Cronos Partners With Ginkgo to Develop Lab-Grown Cannabis,” Bloomberg, September 4, 2018.)
Ginkgo, for its part, maintains a 100,000-square-foot lab in Boston.
Cronos sealed the deal with $22.0 million in cash to fund research and development, and another $100.0 million worth of common shares that will be released as certain production milestones are hit.
“They hadn’t spent a zillion dollars buying out too many farms. Their focus is to get the right stuff and make it the most efficiently with the highest purity,” Jason Kelly, CEO of closely held Ginkgo, said in an interview with Bloomberg. “The reality is that brewery economics is going to wipe the floor with farming economics.”
“It’s cheaper, it’s not subject to weather conditions, the price isn’t all over the place, it’s not different if you grow it in Morocco or somewhere else, it’s just a much better product.” (Source: Ibid.)
As I write this, CRON stock is up about eight percent. At one point, it was up well in the teens before dropping to a low point of five points, all in the first hour or so of trading.
That means that CRON stock is likely to be in store for some volatile movement in the next few days.
Another victim of Wednesday morning’s volatility, Canopy Growth Corp (NYSE:CGC) has seen up-and-down swings to start the day.
CGC stock initially jumped by around eight percent to start, but fell to be down about three percent at the low point of the morning.
The stock now appears to be rallying, down about two percent but headed in the right direction.
CGC stock is undergoing an industry-wide volatile movement that came about after Cronos Group’s big move. This has sent many marijuana stocks on rollercoasters in terms of stock performance to start the day.
CRON & CGC Stock Performances
In the chart below are the recent performances of the stocks for Canopy Growth Corp (blue line) and Cronos Group Inc (black line):
Chart courtesy of StockCharts.com
The marijuana news today is only solidifying what we already know; there’s a lot of money to be made in the pot industry. Wall Street’s interest is only one of many gauges that are proving that statement again and again.
And as the pile of gold only gets higher, the shine is going to attract those much-needed institutional investors to help push the industry to its fullest potential.
In other words, a win-win.