Marijuana News Today: How Marijuana Legalization in Canada Could Send Pot Stocks Soaring

marijuana news today 6 June
iStock.com/AlexLMX

Marijuana News Today

In the marijuana news today is the growing concentration of various governments looking at Canada as marijuana legalization in that country nears.

Many are interested in how the first modern economy to nationally legalize pot for recreational use comes to terms with the newly permitted substance.

Everything from packaging designs, to age restrictions, to growing permits is being examined with a close attention to detail, no doubt because many countries see the writing on the wall. Marijuana legalization is all but certain in the future. (Source: “All eyes on Canada as first G7 nation prepares to make marijuana legal,” The Guardian, June 6, 2018.)

How Canada responds to cannabis legalization—and how it affects the country’s population, tax base, healthcare system, etc.—is going to have a profound effect on the marijuana market for years, maybe even decades to come.

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“Just look at Canada,” politicians will be saying for years, although how the Great White North handles marijuana legalization will determine whether those words will be laced with admiration or condemnation.

In any case, some countries will be much less gung-ho about legalizing the drug if Canadian marijuana legalization doesn’t turn out as positively as pot stock bulls hope it does.

And, of course, the slower that legalization takes place across the globe, the worse off marijuana stocks will be in the long term.

While you can expect a healthy bump for marijuana stocks once legalization hits, my fear is that, in the immediate aftermath, you’re going to see a pullback in the market.

As is often the case in the marijuana industry, you’ll see very impressive gains—perhaps too impressive—and investors will grow cautious and concerned over the price-to-earnings (P/E) ratios and seemingly inflated market caps.

That would lead to a correction, with those gains being reduced or given back entirely.

One way to prevent that from happening is if Canadian marijuana legalization goes off without a hitch.

Of course, expecting perfection from a country’s legislature is a little far-fetched, but, if the legalization process is relatively smooth, sales are strong, and the marijuana integration process is more or less successful, we may be able to avoid a harsh correction in marijuana stocks.

If things go well, I predict gains as high as 50% for pot stocks from now to the end of 2018. That’s a big if. How Canada handles marijuana legalization will have a profound effect on the industry.

Canopy Growth Stock News

Speaking of the present, the marijuana news today about pot stock price movements is something we can be happy about.

So far, June has been kind to the pot market.

Canopy Growth Corp (NYSE:CGC) is up about seven percent since the beginning of the month. That’s a healthy rebound from the waning weeks of May, when shares were down across the board.

Chart courtesy of StockCharts.com

CGC stock has been the beneficiary of its move to the New York Stock Exchange (NYSE).

The company continues to expand its presence in Canada in the lead-up to legalization, obtaining more permits in more provinces to open retail locations once cannabis legalization arrives.

Canopy Growth stock is in a very strong position to take advantage of Canadian marijuana legalization. Provided the process goes smoothly, I foresee a strong performance by CGC stock to close out 2018.

Aurora Cannabis Stock News

In opposition to Canopy Growth is perhaps its greatest rival, Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB).

While not really rivals in any meaningful sense, Aurora Cannabis and Canopy Growth are the two behemoths of the industry, jockeying to be the largest marijuana company by market cap.

Aurora Cannabis stock made a big move to that end when it announced its acquisition of MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF)—although that blockbuster merger is taking longer than expected.

ACBFF stock is up by over five percent in the past five days, in keeping with the industry’s overall gain.

What I am really interested to see is how the company will perform post-MedReleaf acquisition.

The weeks following the merger announcement have been uneven for Aurora Cannabis stock and MedReleaf stock, so how the combined company performs in the aftermath of the buyout is hard to predict.

MedReleaf Stock News

Speaking of MedReleaf stock, the company is still available to be bought until the merger is finalized.

MedReleaf stock was very uneven in May, much like Aurora Cannabis stock. Both companies spent periods being up and down, usually at opposite times.

MedReleaf stock is up around four percent over the past five days, but the company’s unstable performance, especially in opposition to Aurora Cannabis stock, makes it hard to recommend.

Of course, should the unexpected happen and the acquisition fail (note: there’s no evidence that this will happen), I believe that MedReleaf stock would be hit harder than Aurora Cannabis stock.

Analyst Take

It’s no overestimation to say that Canada is the center of the marijuana news today.

The country moving ahead with cannabis legalization is going to be one of the most pivotal events in the marijuana market to date. The ripples of that legislative process will pulse outward for years to come.

Pot stock bulls ought to keep up to date on Canadian marijuana legalization, to inform their investment decisions for today and for the future.