Marijuana News Today
If last week wasn’t enough in terms of good news coming out of U.S. marijuana legalization, then the marijuana news today should be enough to push you over the edge. Seven U.S. mayors have banded together to form a coalition with the intent of pushing for federal marijuana policy reform, a few short days after President Donald Trump came out with one of his most supportive statements yet on marijuana.
The mayors from Seattle, Portland, Denver, San Francisco, Los Angeles, Las Vegas, and West Sacramento came forward to sponsor a resolution at the U.S. Conference of Mayors in Boston. The resolution asked the federal government to rethink its policy of marijuana by removing cannabis from the list of illegal drugs, alongside several other requests. The resolution received unanimous approval by the broader gathering.
“As mayors of cities that have successfully implemented and managed this new industry, we have hands-on experience that can help Congress take the right steps to support other local governments as they prepare to enter this new frontier,” said Denver Mayor Michael B. Hancock, who led the coalition. “We all face common challenges.” (Source: “7 mayors want pot removed from federal list of illegal drugs,” The Seattle Times, June 11, 2018.)
The mayors were feeding off of the momentum from last week, when Trump came out in support of a new bipartisan effort in Congress to remove cannabis from the Schedule I classification for narcotics.
“I support Senator Gardner. I know exactly what he’s doing,” Trump told reporters in Washington, D.C. on Friday when asked about the legislation. “We’re looking at it. But I probably will end up supporting that, yes.”
The resolution put forward by the mayors made several demands, including:
- Remove cannabis from the federal Controlled Substances Act
- Allow employers in the marijuana industry to take tax deductions similar to those allowed in other businesses
- Provide guidance to financial institutions that provide banking to cannabis businesses
- Extend legal access to medical marijuana for U.S. veterans
This is huge news for the push toward U.S. marijuana legalization—and, by extension, marijuana stocks.
If the federal government removes its designation of marijuana as a prohibited substance, then we’ll be able to see companies operate more easily across state lines, allowing the development of larger corporations with bigger market caps.
Consider that while Canadian marijuana legalization is on the way, already more Americans have access to recreational pot than will Canadians. And by a wide margin; California alone is a larger market than Canada.
By allowing these companies to operate across state lines—not to mention assuage fears that these businesses are illegal and therefore begin to list on major U.S. exchanges—we could see a massive uptick in stock value across the board. Not to mention the creation of a whole new class of marijuana stocks.
As the push for U.S. marijuana legalization grows firmer, the question is increasingly one of “when” and not “if.”
Marijuana Stocks Today: Aurora Cannabis Stock
Chart courtesy of StockCharts.com
In a strange turn of events, while the political news coming out of the U.S. is all positive for marijuana, pot stocks have only suffered since the bipartisan legislation was first announced last week.
One company that has taken a hit is Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB). Aurora Cannabis stock is down about one percent over the past five days, with the stock price registering a decline, even as Trump and Congress begin to put their weight behind marijuana reform.
It’s an odd movement in the stock value that doesn’t quite add up, but one that we’ll be monitoring closely.
Furthermore, Aurora Cannabis stock today announced that it has signed a deal to purchase Anandia Laboratories Inc. in an all-stock deal valued at $115.0 million. Anandia is a research and development company that also provides analytical testing for clients licensed under Canada’s medical cannabis regulations. (Source: “Aurora Cannabis buying Anandia Laboratories in all-stock deal valued at $115M,” Financial Post, June 12, 2018.)
The move is yet another aggressive play by Aurora Cannabis stock following its blockbuster acquisition of MedReleaf Corp (OTCMKTS:MEDFF, TSE:LEAF) and several other smaller companies this year, all in anticipation of Canadian marijuana legalization on the horizon.
Another company that has been unable to benefit from the political gains made in the U.S. is Aphria Inc (OTCMKTS:APHQF, TSE:APH).
While a marijuana stock market darling in May, June has so far not been particularly kind to Aphria stock, especially the past five days. The company is down about five percent and is trending in the wrong direction. This comes after a swift and substantial rise of double digits throughout May.
Aphria stock has, of course, struggled at times in 2018, but it all seemed to turn around last month. But that good momentum has not sustained itself in June so far.
While the political news coming out of the U.S. is extremely positive, the stock market is not behaving like it is.
While there isn’t always a correlation between political movement in the U.S. and pot stock gains, the growing support for U.S. marijuana legalization is one of the better outcomes for the industry overall down the line.
The drawback is likely a market response to the strong gains in May—a mini-correction of sorts. I don’t expect it to be long-lasting.