Marijuana News Today
We are officially less than one day away from recreational marijuana legalization in Canada, and our marijuana news today examines what that will mean for the future of weed. Meanwhile, the pot stock market saw an across-the-board dip this morning.
With only hours remaining before the big event, investors ought to understand what Canadian marijuana legalization what it will look like, and what it represents for the industry.
First, there’s a good chance that, in the beginning, supply will be scarce. As is often the case when governments start permitting the use of recreational pot, we’ll likely see a rush of consumers trying to be part of the first wave of legal marijuana users.
Due to a number of last-minute changes in several Canadian provinces, as well as the relatively short time that the legal cannabis producers have been around, expect there to be marijuana shortages across Canada at first. That situation, however, will likely be resolved rather quickly. (Source: “Canada starts legal marijuana sales Wednesday as world watches closely,” USA Today, October 16, 2018.)
These shortages won’t have much of a long-term effect on the industry, but, depending on how they are reported, we could see marijuana stock prices jump as investors come to see the market as undervalued. This is one possible scenario, though hardly guaranteed.
What is guaranteed, however, is that this will be a huge boon to marijuana stocks in the long term.
Over the next few months, marijuana companies are going to rise and fall based on the success of the Canadian market. This has much more to do with analysts’ expectations than with actual sales numbers.
For instance, sales could be great, but if they fail to meet inflated projections, marijuana stocks will drop accordingly. Conversely, should the market prove to be larger than analysts are projecting, we’ll see a commensurate boost to share prices.
Which, to reiterate, means that the legal marijuana market is now subject to the expectations of investors now more than it has ever been.
Another key factor in the fate of marijuana stocks is just how smoothly the transition from illegal to legal pot will be handled.
If we see massive tax revenues and relatively few problems, expect many other powerful countries to begin considering marijuana legalization. Should we see more governments dedicate themselves to legalization, marijuana stocks will soar in proportion to the size of the market.
For instance, if Australia pledges to end pot prohibition, expect marijuana stocks to see relatively strong gains. If larger countries like Germany or the U.S. legalize marijuana, expect the stock gains to be even more immense.
With that said, the next few months will be very unpredictable in the marijuana sector, with many stocks shooting up and down on the backs of quarterly reports and other data releases.
While Aphria Inc (OTCMKTS:APHQF, TSE:APH) has been going through a resurgence lately, APHQ stock once more has found itself down in the market. Aphria stock fell about four percent to start the day, which was a fairly significant loss.
But we saw marijuana share prices drop universally this morning—likely a pullback, considering just how much hype there has been leading up to this moment (Canadian legalization).
I don’t expect these drops to last, especially in the case of APHQF stock. The company has been one of the more intriguing plays as of late.
Consider that Aphria stock took several steps backward this year in terms of value, making it more affordable—possibly even a bargain—at its current price.
Also, Aphria Inc has been in talks with Altria Group Inc (NYSE:MO), a tobacco producer. While nothing concrete between the two companies has been confirmed, if Altria makes a move toward investing in Aphria—or even just working with the company—expect to see huge gains.
Aurora Cannabis Stock
Another company that was in the dumps this morning (but which nonetheless represents an intriguing play) is Aurora Cannabis Inc. (OTCMKTS:ACBFF, TSE:ACB). ACBFF stock dropped by about eight percent in early-morning trading today.
One of the largest companies in the cannabis industry, Aurora Cannabis has a lot going for it right now, even if its performance this morning would indicate otherwise.
The company has been linked to talks with The Coca-Cola Co. (NYSE:KO), with a deal possibly to follow. While nothing has emerged as of yet concerning that particular talk, Aurora is in the same boat as Aphria in that, should a deal be forthcoming, we can expect to see the company’s share prices skyrocket.
It’s worth noting that Aurora Cannabis stock is expected to list on the New York Stock Exchange by the end of this month, making it just the fourth pure-play marijuana stock on a major U.S. stock exchange, likely prompting another surge in stock value.
APHQF & ACBFF Stock Performances
The APHQF stock (black line) and ACBFF stock (blue line) performances from the past week are seen in the chart below:
Chart courtesy of StockCharts.com
The next few weeks are going to have a tremendous effect on the future of the legal cannabis industry, and the marijuana news today reflects that.
With Canadian marijuana legalization now almost in effect, the main driving forces on the pot stock market for the next several months will be 1) the sales numbers and 2) how other countries react.