WEED vs. CRON: Why Canopy Growth Could Slow CRON Stock

weed vs cron stock

Cronos Stock and Canopy Growth Stock Tackle Nasdaq

Right now, two Canadian marijuana stocks are making big waves due to their relation to the Nasdaq: Canopy Growth Corp (OTCMKTS:TWMJF, TSE:WEED) and Cronos Group Inc (NASDAQ:CRON).

CRON stock is still soaring after it first listed on the Nasdaq, having gained over 34% last week. Canopy Growth stock, conversely, only gained about four percent last week, but did manage to make big waves when it announced that it was looking to list on the Nasdaq. And that could be trouble for Cronos stock.

Canopy Growth is the biggest player in the marijuana industry by market cap and it has long been a dominant company in the market, at least in the eyes of many investors.

With that prominent role in the industry secured, a WEED stock listing on the Nasdaq would certainly draw in investor interest and a healthy influx of capital from folks who were too skittish to invest on Canadian stock markets or buy over-the-counter shares.

CRON stock jumped by such a huge margin precisely because it enjoyed the Nasdaq boost, where many investors were given the opportunity for the first time to invest in a marijuana company using an exchange they trusted.

But a key factor of CRON stock’s success is that it is the first and only marijuana company on that listing. Should a competitor join it—especially a competitor with as strong a brand name and industry heft as Canopy Growth stock—we may very well see the Nasdaq boost that it has enjoyed evaporate. Or at least face a heavy slowdown.

“When Constellation put money into our business, the number of U.S. institutional investors interested in us went way up,” said Canopy Growth CEO Bruce Linton. “The Nasdaq is doing a great job not allowing people to list who break federal laws and that’s a place where we should list in due course.” (Source: “Canadian weed producer Canopy should list on Nasdaq ‘in due course’: CEO,” Reuters, March 1, 2018.)

“We prepared to list in October and we pulled it back, because trying to do the deal with Constellation was already 11 months of complexity,” said Linton. (Source: “Canopy Growth eyes potential Nasdaq listing,” Financial Post, March 1, 2018.)

Analyst Take

Any marijuana stock joining the Nasdaq is bad news for CRON stock because it adds an alternative destination for investor dollars. A company like Canopy joining the Nasdaq could very well wipe away much of the gains we’ve seen Cronos enjoy. The key thing to watch here is timing.

If Canopy joins in the near future, then I expect Cronos to take a heavy hit. If, however, WEED stock is unable to list on the Nasdaq for several months, CRON stock will have gained enough ground that the correction will be minimal in comparison.