Marijuana News Today: Billionaires Begin to Invest in the Marijuana Market

marijuana news today 7 August
iStock.com/OlyaSolodenko

Marijuana News Today: Pot Industry Heats Up

You may not immediately associate chewing gum with pot in your mind, but that soon could change, as the marijuana news today features William Wrigley Jr. II, billionaire heir to the Wrigley gum fortune, jumping in with both feet into the pot industry.

Wrigley Jr., through his personal investment firm, led a $65.0-million equity financing round for Surterra Wellness, a Florida-based medical marijuana company. He also now head’s the company’s board following the investment. (Source: “The billionaire heir to a chewing gum fortune is making a huge bet on marijuana,” Business Insider, August 6, 2018.)

While this may seem more like a niche interest story for the marijuana industry—”former gum magnate decides to turn away from sticky bubbles to sticky bud”—there’s a lot here for marijuana bulls to be excited about. The main thing is that big money is coming into the marijuana industry, whether it’s via billionaires or institutional investors.

One of the few deficits when it comes to marijuana investing has to do with big-time investors with massive pools of capital. There are a variety of reasons why we don’t see more investment from these parties, but the main one is concern over the legal ramifications of investing in marijuana.

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Many investors in the U.S. are wary of buying into the marijuana market, primarily due to the federal laws prohibiting marijuana usage, sale, and distribution. With those laws in place, technically the entire industry could be shut down at a moment’s notice, should the federal government choose to exercise its power.

The U.S. marijuana crackdown was something we covered at length when Attorney General Jeff Sessions assumed his post in the Trump administration. Sessions, of course, is a known drug crusader who has long pursued more stringent marijuana laws.

While the U.S. marijuana crackdown never came to pass, the fact that it could still happen any day has left many larger investors wary.

You could argue that these institutional investors and billionaires in the U.S. could invest in Canadian marijuana companies that are safe on their own exchanges as the drug is legalized in the country, but they would still be at risk of U.S. federal law should they want to move the capital gained from those investments back into the U.S.

And that brings us back to Wrigley Jr.

There are genuine concerns that institutional investors and billionaire investors have when it comes to marijuana investing. The laws are tricky to navigate and entail a lot of risk for these multi-billion-dollar players.

But if Wrigley Jr. and other larger investors can help destigmatize the industry, that would be a huge win for the marijuana market. Pot stocks would swell in value should we see such a huge injection of capital hit the industry from billionaires and larger institutions.

We’re not likely to see that happen until federal law in the U.S. changes, but in the meantime, Wrigley Jr. and other bigger investors getting into the industry will help spur others toward action, acting as examples, and help get the money flowing that can only be a good thing for short-term pot stock growth.

Marijuana News Today: Tilray Stock

In contrast to yesterday’s dismal pot stock market results, the marijuana news today has largely positives to report.

The first big winner we’ll be looking at is Tilray Inc (NASDAQ:TLRY). The first marijuana company to have an initial public offering (IPO) on the Nasdaq, Tilray stock has been extremely volatile, but very lucrative to those who invested early in the company.

Tilray stock has shot up about 45% since its IPO in mid-July. Of course, it had reached nearly 80% gains in its second day on the market, only to have the industry react by cutting that massive jump in value in half.

Still, 45% gains in a few short weeks is nothing to be complaining about, especially considering that many other pot stocks are still struggling in the current marijuana correction.

But Tilray stock isn’t done with its gains yet, apparently, as it has jumped by about eight percent over the past week.

While I’m wary as to the long-term outcome due to its gains primarily being the result of hype, there is still money to be made as TLRY stock will continue to behave with volatility until the market feels that it is correctly priced. That means day traders have a prime opportunity to profit from Tilray stock.

Aphria Stock

The one sour note in our marijuana stock roundup today is Aphria Inc (OTCMKTS:APHQF, TSE:APH).

Filling a role that it has largely gotten used to this year, Aphria stock is once again on the downturn, having lost about six percent over the past week. The stock has been down virtually the whole year, and this week appears to be no exception.

What investors are trying to figure out is if there is still good value in Aphria. While I believe that the company does have something to offer, I’ve been burned too many times expecting it to pull itself out of its string of poor performances to get back on the company bandwagon.

As such, I’m rather skeptical on Aphria stock and would want to see steady gains for a prolonged period of time—say, a month—before I would feel comfortable getting back into the company.

OrganiGram Stock

But now back to the good news, with OrganiGram Holdings Inc (OTCMKTS:OGRMF, TSX:OGI.V).

OrganiGram stock is up about nine percent over the past week and remains one of my personal favorite picks in the marijuana industry.

With OrganiGram, you get a penny marijuana stock that is, relative to many other companies in the industry, undervalued and has yet to experience a truly massive breakout.

Those factors combine to make OrganiGram stock one of the more exciting options in the industry, and we’re seeing the results this week, as the company has leaped upward in value, while many other pot stocks remain down.

I’ve been a champion of OrganiGram stock for some time now, and we’ve seen that pick pay off multiple times in 2018, with last week being another strong win.

TLRY, APHQF, & ORGMF Stock Performances

Check out the chart below of the recent performances of Tilray (black line), Aphria (blue), and OrganiGram (red) stocks:

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today is, on the whole, very positive.

We’re seeing another big-time investor enter the industry by way of William Wrigley Jr. II, potentially encouraging other institutional and well-moneyed buyers to enter the industry. The boon of such an influx of cash for marijuana stocks would be massive.

On the flip side, the pot stock market had a lot of good news for us, as two companies we examined showed near-double-digit gains over the past week.

While many other pot stocks continue to struggle, these bright spots in the industry lend hope to investors and give them the means to make money even in a downturn.