Marijuana News Today
Few things would be as exciting in the marijuana news today as another massive investment from a beverage company. While we don’t have anything quite as dramatic as that, we do have reports that several beverage makers are looking to get into the marijuana market, which should elicit excitement from pot bulls.
Remember that Constellation Brands, Inc.’s (NYSE:STZ) $3.8-billion investment in Canopy Growth Corp (NYSE:CGC) sent the entire marijuana stock market on a two-week rush, wherein double-digit gains became the norm.
So any big beverage company seeking to enter the marijuana market could be another reason to spur an investment rush. That said, I doubt we’ll see another push like our most recent one until we get sums larger than $3.8 billion coming in.
Officials from Anheuser-Busch InBev NV (NYSE:BUD), Pernod Ricard SA (OTCMKTS:PDRDF, EPA:RI), Heineken N.V. (OTCMKTS:HEINY, EPA:HEIA), The Coca-Cola Co (NYSE:KO), and Diageo plc (NYSE:DEO) have been familiarizing themselves with the pot industry by meeting with executives, touring cultivation facilities, and otherwise exploring the cannabis sector—possibly signaling future investment. (Source: “Beverage makers explore entries to Canadian cannabis sector,” The Globe and Mail, August 28, 2018.)
This is largely seen as a preemptive move in order to head off what could be a costly rivalry for beverage makers.
In North America, sales of mid-priced beers dropped 12.5% to $37.3 billion compared to five years earlier. They are projected to tumble another 14.3% by 2022, according to market researcher Euromonitor.
North American soft drink sales were relatively flat (pun not intended) between 2012 and 2017, at $76.4 billion last year, and they are expected to fall 3.8% by 2022.
What This Means for Marijuana Stocks Long-Term
The increasing partnership between marijuana stocks and Big Alcohol (and the beverage industry in general) is going to help spur growth among pot stocks.
While alcohol companies need a way to fend off declining sales, marijuana companies are in need of investment, resources, and innovative products to roll out after legalization. These two industries, then, are perfectly suited to help one another out.
Another huge benefit to the creation of marijuana-infused beverages is that it provides yet another entry point for first-time cannabis users. While there’s still a stigma surrounding smoking marijuana, far fewer people are going to be put off by a beer that has some pot in it. Drinks are a far easier sell to a skeptical crowd and will certainly reel in a wider consumer base.
And again, the Constellation Brands investment was pretty much singularly responsible for turning the entire marijuana industry around. More investments of that magnitude are certain to be on the way, and they will bring about massive growth.
Canopy Growth Stock
In terms of the marijuana news today on the stock market, we have decent movement, with small gains across the legal cannabis sector.
Canopy Growth Corp was up about two percent in early-morning trading today and up about 17% since the beginning of last week. Today’s modest gains are welcome, considering that the week started off with a steep decline of about 10%.
There seems to be little fear of a massive pullback at this point; the gains have proved sustainable over the course of several weeks now.
This is in sharp contrast to the fiasco related to the Canadian marijuana legalization date announcement. That incident saw stocks skyrocket over a period of two days, only to see a massive correction set in, with gains leaking away for more than a month.
And of course, while the entire marijuana stock market was boosted by the Constellation Brands investment announcement, it was CGC stock that was the target of that money. As such, expect Canopy Growth stock to remain a very visible and promising option in the eyes of investors.
Since the marijuana news today has to do with beverage company investments in the marijuana industry, why not round out our stock examination with another company that was on the receiving end of a deal with Big Alcohol?
I’m talking about Hydropothecary Corp (OTCMKTS:HYYDF, TSE:HEXO). Hydropothecary stock was the beneficiary of an investment from Molson Coors Brewing Co (NYSE:TAP) earlier this summer.
While HYYDF stock hasn’t been shooting up like Canopy Growth stock, it has still performed admirably, gaining about 13% over the past week and being up by nearly three percent in early-morning trading today.
I’ve been a fan of Hydropothecary stock ever since it got in bed with Molson Coors. These Big Alcohol deals are going to pay off big down the line, and that makes HYYDF stock a very promising investment.
CGC & HYYDF Stock Performances
In the below chart are the recent performances of Canopy Growth stock (black line) and Hydropothecary Corp stock (blue line).
Chart courtesy of StockCharts.com
The increasing likelihood of more investments from massive beverage companies should have marijuana bulls salivating.
While the marijuana news today didn’t quite have any concrete details, we are seeing that more and more companies are interested in getting in on the marijuana industry, with large capital injections to follow.