Marijuana News Today
In the marijuana news today is further evidence of how U.S. federal government policies are hindering institutional investors from getting involved in the legal marijuana industry—to the detriment of the pot stock market.
Yesterday, we examined how institutional investors were staying at arm’s length from the industry, refusing to purchase large stakes in marijuana companies, despite a lot of value being generated.
As for the state of marijuana stocks today, we’re looking at a much more basic—but no less serious—problem of banks not even being willing to hold money that comes from marijuana companies.
The problem, of course, stems from federal marijuana laws forcing banks to comply with those laws, even in states where the cannabis industry is perfectly legal.
Since banks are federally regulated and often act across state lines, they are reasonably concerned about handling money that theoretically could be seized at any moment by overzealous feds.
While the likelihood of a U.S. crackdown on marijuana is slim—and growing slimmer by the day—there isn’t much incentive to assume such a risk for many banks, especially larger ones.
The result is that, while marijuana is legal in many states across the country, it is still largely operating as a cash business.
Naturally, this carries with it a number of problems, not least of which is storage and security.
It also hardly lends credence to an industry when they keep all their earnings in a safe under the bed, so to speak, instead of storing it in a bank like 99.9% of businesses in America.
The whole situation is unfavorable to both institutions and the marijuana businesses themselves, but we’re a long way from solving it.
There is legislation in the House that would like to see this regulation done away with—and it’s currently co-sponsored by 90 legislatures. The measure was introduced as a bipartisan action from Democrat Senator Elizabeth Warren (Massachusetts) and Republican Senator Cory Gardner (Colorado). (Source: “Banking Woes Continue To Plague Legal Pot Industry,” Forbes, July 12, 2018.)
Both senators have previously come out in strong support of marijuana reform. This legislation, called the “States Act,” would allow banks to follow the marijuana laws of the state in which they operate, and still be considered in compliance with federal law.
The bill would provide the necessary safeguard that banks would need to become more involved in the marijuana business.
The problem is that, even with all the support that the bill has, it is unlikely to pass.
The banking and institutional investor limbo that marijuana now finds itself in is perhaps one of the largest impediments to further growth in the industry.
While the legal marijuana sector is still going to grow, the federal government’s unwillingness to enact policies that are more in keeping with the will of the American people is going to dampen some of the industry’s potential.
In the meantime, marijuana stocks will have to make do with successes in other geographical areas.
CGC Stock News
The marijuana news today may not be the brightest in the political world, but the stock market is finishing the week on a positive note.
While gains were not universal, many marijuana stocks either saw slight upticks or at least recovered from their early-week blues.
Chart courtesy of StockCharts.com
Canopy Growth Corp (NYSE:CGC) is finishing the week about one percent down. That’s well within what I had predicted for the company. It reflects that the industry is looking for muted, lighter movement in comparison to the dramatics that played out in June, with sharp rises and steep declines.
CGC stock also benefited from being named as a cannabis provider for British Columbia, Canada’s third-largest province.
Canopy Growth’s acquisition of Hiku Brands Company Ltd (OTCMKTS:DJACF, CNSX:HIKU) was another positive sign.
Hiku owns the “Tokyo Smoke” chain of stores, which sell cannabis-related products. Hiku is also going to step into the marijuana space on October 17, when it will begin peddling recreational marijuana at its storefronts.
CRON Stock News
While CGC stock has suffered over the past two weeks (although not dramatically), Cronos Group Inc (NASDAQ:CRON) has instead gone the other direction. It registered another week of mild gains, this time up about one percent at week’s end.
CRON stock continues to be a bit of an enigma, and I caution investors to see if these gains are sustainable. Still, the company has either been a dream or a nightmare for investors, depending on when they purchased the stock.
CRON stock is up about 15% over the past two months, but down about nine percent year-to-date.
This indicates the up-and-down year that CRON stock has experienced, with a massive jolt coming to the stock value by way of its listing on the Nasdaq— only to have investors pull back as time went on. The stock has rallied in the past several months.
The whole ride has been an unpredictable one, but that makes CRON stock intriguing for marijuana investors seeking a hedge investment that can—and often does—run counter to marijuana trends.
MEDFF Stock News
Another marijuana company that is emerging from this week with a little bit of growth is MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF).
Up about two percent on the week, MedReleaf stock continues to be one of the stronger performers over the past few months, ever since it was announced that the company would be the target of an acquisition by Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB).
While the deal is taking longer than expected, that is ultimately good news for MedReleaf stockholders, as the company only continues to rise in anticipation of the deal closing.
With approval from the Canadian anti-trust bureau, the deal is well underway. Of course, should the acquisition be derailed, then expect a tremor in the MedReleaf stock value. However, there is nothing to indicate that this is the case.
MedReleaf was also tapped to be a part of the B.C. licensing deal.
All this makes MedReleaf one of the more enticing short-term plays on the market…while it remains.
The marijuana news today reveals once again the need for political action to take place in the United States.
The country has this aching beast ready to surge, bringing jobs and revenue. However, it is shackled, due to archaic federal laws that view marijuana on par with heroin.
There’s no doubt that these draconian vestiges of a bygone era are on their way to the cutting board. But the longer the delay, the longer it will be until we see another massive surge of capital hit the legal marijuana market.
When it eventually comes, be ready. That will certainly mark the start of another marijuana boom.