Marijuana News Today
In the marijuana news today is yet another signal that the pot industry has gone mainstream. There was a new write-up in The New York Times, not just about marijuana legalization, but about investing in the sector.
This is significant because it further cements what marijuana stock bulls know to be true: the legal cannabis industry is legitimate and is a great target for investment. (“Legal Marijuana Is Coming to Canada. Investors Catch the Buzz.,” The New York Times, July 8, 2018.)
The problem with the article from an investment standpoint, however, is that the more articles about marijuana investing that appear in widely-read newspapers, the bigger the influx of casual retail investors we’ll see.
While not necessarily a bad thing (after all, capital injections will help companies grow), the wider the appeal to the mainstream, the higher the number of uninformed investors who will get involved.
By “uninformed,” I mean people who will only see dollar signs in the marijuana industry and not understand the ebb and flow of pot stocks. As additional casual investors get involved, we’ll likely see higher rates of volatility, with panic selling and hysterical buys.
It’s not unlike the cryptocurrency sector, which very much had the same problem. It had strong and steady growth for years (albeit with a number of caveats), only for it to explode last year when cryptocurrencies hit the mainstream. The results were a massive rise followed by an equally precipitous fall.
So, the marijuana news today is bittersweet.
“Sweet” in that more exposure in the mainstream press will encourage investors—most importantly institutional investors—to see marijuana as legitimate. “Bitter” in that, as more casual investors get involved, the more volatility we’ll likely see.
In an industry already rife with volatility, that added bit of uncertainty isn’t exactly what the doctor ordered. On the flip side, the new injection of capital will be good overall for marijuana stocks, both in the short and long terms.
CGC Stock News
As is customary, we’re going to start off by examining the industry’s top dog, Canopy Growth Corp (NYSE:CGC), to see how it’s faring in the marijuana news today.
CGC stock was up about half of a percent in early-morning trading today, after losing about two percent over the course of last week.
Chart courtesy of StockCharts.com
Canopy Growth made big waves last week when it announced a major South American deal.
The deal sees the largest marijuana company by market cap further expand its global reach with the creation of a new medical marijuana subsidiary, Canopy LATAM Corp.
The deal, which is valued at about $150.0 million, marks one of the Canopy Growth’s biggest plays in 2018.
“This isn’t a strategy about more growing that we’ll try to send back to Canada or something like that,” said Mark Zekulin, president and co-CEO of Canopy Growth. “This is about building a Latin American market.” (“Canopy Growth unveils new Latin America plan, buys Colombian medical marijuana company,” Financial Post, July 5, 2018.)
Through the creation of Canopy LATAM Corp., Canopy Growth acquired Spectrum Cannabis Colombia S.A.S. and plans to expand across the continent.
The move boosted CGC stock in its immediate aftermath, only to have those gains recede. Still, long-term I like this deal a lot, and I continue to remain impressed by Canopy Growth stock in 2018.
CRON Stock News
As I predicted last week, we didn’t see a whole lot of movement in the marijuana market in the past few days. This was due to the Fourth of July holiday and a need for the industry to settle itself following the massive ups and downs of late June.
Cronos Group Inc (NASDAQ:CRON), more than any other stock, followed my prediction to a T: it had zero percent movement over the last week.
Considering that most other stocks fell by a few percentage points, zero percent isn’t all that bad.
It’s worth noting that CRON stock is up about eight percent from two weeks ago, making it one of the stronger performers in July so far.
I still have my reservations about Cronos stock, but the company is making a decent case for itself so far this month.
ACBFF Stock News
Much in the same boat as CGC stock, Aurora Cannabis Inc (OTCMKTS:ACBFF, TSE:ACB) fell about two percent over the last week, well within the range of what I predicted.
But Aurora Cannabis stock and CGC stock have a lot more in common than just muted stock movement: both companies were among the 13 licensed producers to sign supply deals with the Canadian province Alberta.
While this was a win for all of the companies selected, it was especially important for Aurora Cannabis stock, since the company is based in Alberta and has three facilities within that province.
Media exposure is, on the whole, a good thing for the legal marijuana stock market, making the marijuana news today positive overall.
Nevertheless, as more attention floods in, so too will the mob. And the mob can be dangerous to the investors who have a little more savvy and awareness.
While it means that more money is to be made, it also means that investors need to be more careful and measured than usual. Increased volatility can be a blessing or a curse, depending on how you play it. Marijuana bulls will need to adjust accordingly.