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Jeff Sessions’ War on Marijuana Rattles Cannabis Stocks, but the Battle Is Far from Over

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North American marijuana stocks plunged for a second straight session Thursday, as investors continued to weigh the Trump administration’s policy U-turn on recreational cannabis.

North America Marijuana Index

The Marijuana Index, which tracks 39 of the leading cannabis companies in November America, plunged 6.4% to 327.58. It was the index’s second consecutive decline and third major reversal since Jan. 4, the day Attorney General Jeff Sessions reversed the Obama-era guidance on cannabis laws. In a one-page letter, Sessions said the government would renew its commitment to tackling the cannabis industry.

Despite recent volatility, the has gained more than 73% over the past month.

Canadian Marijuana Industry

Much of the decline on Thursday was concentrated on the Canadian side of the border. The Canadian Marijuana Index, which is capitalized at $28.4 billion, fell 9.8% to 908.27.

Canadian pot stocks started off the year with a bang as a number of major deals were announced. In the first week of January, Edmonton-based Aurora Cannabis Inc. (ACB) announced a $55 million acquisition of The Green Organic Dutchman Holdings, an Ontario-based licensed medical cannabis producer.

Emerald Health Therapeutics, another licensed medical marijuana producer, also announced an undisclosed Canadian investor agreed to buy a $25 million stake in the company.

Meanwhile, Aphira Inc. of Leamington, Ontario announced it had closed a $115 million bought-deal share offering.

Sessions Unlikely to Deter Cannabis Market

The Attorney General appears to have reignited Washington’s war on marijuana. The policy of overarching federal enforcement of cannabis laws will likely create some hesitation on the part of investors and entrepreneurs, but is unlikely to change the course of history following broad legalization campaigns in several states.

Democratic representatives from pro-marijuana states, such as California and Colorado, have criticized Sessions’ reversal on the Obama administration policy that allowed states to legalize weed without federal approval.

On Jan. 4, the Colorado State Democrats issued the following statement via Twitter:

“We’ll give Jeff Sessions our legal pot when he pries it from our warm, extremely interesting to look at hands.”

It’s not just Democrats who have raised objections to Sessions’ decision. Colorado Republican Senator Cory Gardner called the move “a trampling of Colorado’s rights.”

“Why is Donald Trump thinking differently than what he promised the people of Colorado in 2016?” Gardner said in a Jan. 4 Senate speech. “Thousands of jobs at risk, millions of dollars in revenue, and certainly the question of constitutional states rights — very much at the core of this discussion.”

The legalization of recreational weed has unleashed a multi-billion-dollar industry that will only grow over the next five years. Current valuations place legal pot sales in the U.S. at well over $6 billion. However, it has been estimated that the state of California alone generates more than $6 billion in sales.

Market participants are observing California closely for clues about how the industry will grow and evolve over time. The state may already represent some 70% of legal marijuana sales across the country, making it the single-most important jurisdiction in the fight for legalization.

The size and growth rate of the legal cannabis sector is subject to great speculation. Research by Ackrell Capital says a hands-off policy approach to cannabis could generate $120 billion in sales as early as 2020.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 546 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Marijuana

Canada Goes Green as Senators Approve Recreational Marijuana Bill

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Canada will become the first G7 nation to legalize recreational marijuana after a Senate vote Tuesday night cleared the final hurdle to a ceremonial approval later this year.

Canada Goes Green

The upper chamber voted 52 to 29 in favor of passing Bill C-45, a controversial proposal to end the generational ban on recreational pot. The Senate passed the bill mere days before a Parliamentary recess began, paving the way for implementation by the end of summer.

It is unclear when Bill C-45 will receive ceremonial approval by the governor-general – the final step before it becomes law – although ministers said an additional 12 weeks beyond that may be required before retail sales begin.

Prime Minister Justin Trudeau took to Twitter Tuesday to announce the Senate’s decision:

“It’s been too easy for our kids to get marijuana – and for criminals to reap the profits. Today, we change that. Our plan to legalize & regulate marijuana just passed the Senate. #PromiseKept.”

Investors Look to Get High on Canadian Weed

The Senate’s decision makes the world’s eleventh-largest economy an attractive destination for yield-seeking investors looking to capitalize on an industry with high-growth potential.

Canadians spent $5.7 billion on marijuana last year, according to the government’s top statistics agency. The nation’s 5 million pot consumers doled out an average of about $1,200 on the green plant and its derivatives, with 90% of the proceeds going to the black market. By comparison, Canadians spent just over $22 billion on alcohol and $16 billion on tobacco products.

This year, Canadians are expected to consume about 474 metric tons of marijuana flower, according to GT Research, a cannabis analytics company. Consumption is expected to reach roughly 861 metric tons in four years.

Research from Deloitte suggests legal pot sales in Canada will exceed $7 billion. However, the economic footprint is expected to be much larger. When factoring direct and indirect activity, legal weed could generate up to $22.6 billion in economic value.

The end of prohibition, once confirmed later this year, will take the weight off marijuana producers that have wagered big on legalization. After a flurry of consolidation domestically, Canadian producers are now setting their sights on countries like Italy, Spain and Colombia for expansion.

The Canadian weed landscape has experienced “merger madness” over the past 12 months, with larger firms snatching up smaller players in a series of moves. Aurora Cannabis Inc. (ACB) recently acquired MedReleaf Corp for $2.9 billion. In January, it agreed to buy CanniMed Therapeutics Inc. for $1 billion.

Canada is now home to over 90 publicly-listed marijuana producers collectively valued at more than $31 billion. The top-24 producers capture about 88% of that market. The biggest pot stocks are listed on the Canadian Marijuana Index, which is nearly four times bigger than the U.S. index despite America being ten times greater in size.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 546 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Marijuana Stocks Trade at Four-Month Highs as Canadian Senate Approves Cannabis Act

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North America’s marijuana index is riding high once again after one of the world’s biggest cannabis markets moved one step closer to full legalization.

Canada’s Senate Passes Cannabis Act

Canada’s cannabis bill passed third reading in the Senate last week and in doing so overcame one of the last critical hurdles to full legalization of recreational marijuana. Bill C-45, the so-called cannabis bill, was approved by a vote of 56-30 with one abstention.

The amended bill goes back to the House of Commons, where Liberal Members of Parliament will determine which amendments to keep and which to omit before sending it back to the Senate. Once the bill is passed, provincial governments will have up to three months to prepare for full implementation of the law. At that point, recreational cannabis will be available for sale. According to various studies, the sale of recreational weed will open up a multi-billion-dollar industry.

However, it’s not entirely clear how long the Liberals will need to review the amended bill before sending it back to the Senate. There are currently three ministers looking over the amendments. Although most Senate amendments are minor, about a dozen stick out as significant impediments to implementation.

For cannabis companies, this could mean many more months of uncertainty. However, in the grand scheme of things, the passing of Bill C-45 is a major breakthrough for businesses that have gambled heavily on the legalization of recreational pot.

Marijuana Stocks Rise

After initial trepidation, marijuana stocks have risen sharply since Canada passed Bill C-45. However, the bulk of the gains have been concentrated south of the border, a sign that investors were becoming more optimistic that the Trump administration would continue to back off states seeking to legalize recreational cannabis.

The North American Marijuana Index, which tracks 41 companies in Canada and the United States, rose 1.8% on Monday to $277.70. That was its highest settlement since Feb. 15.

Shares of marijuana companies have gained 10.6% over the past month but are still well below peak levels from early January.

All of the gains Monday came from U.S. companies, with the likes of MariMed Inc. (MRMD), CV Sciences Inc. (CVSI) and WeedMD Inc. (WMD) putting up large gains. The U.S. Marijuana Index jumped 5.3% to $110.04, its highest since late January.

Canadian cannabis stocks fell 1.5% on Monday, their third consecutive down session. The Canadian version of the marijuana index, which contains 24 companies collectively valued at $26.2 billion, rose to more than two-month highs ahead of the Senate vote on Bill C-45.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 546 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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The Biggest Marijuana Merger Ever Lifts Cannabis Stocks

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An expected merger between Canada’s Aurora Cannabis and MedReleaf propelled marijuana stocks higher on Monday, sending a strong signal that consolidation is afoot ahead of planned legalization this year.

Biggest Merger Ever

Aurora Cannabis, one of Canada’s biggest marijuana companies, is set to purchase MedReleaf in an all-stock merger worth $2.2 billion. According to an official statement, the deal will enable the newly merged company to produce 570,000 kilos (1.26 million pounds) a year of cannabis across nine facilities in Canada and two in Denmark.

The deal is expected to be finalized in August, just a few months before the Canadian government legalizes recreational pot. Canada was set to legalize the drug on July 1 but a series of bottlenecks pushed back the date until the fall.

Under the deal, Aurora will offer MedReleaf shareholders 3.575 shares in Aurora in exchange for every unit in MedReleaf they hand over.

“It gives us a footprint in Ontario, it prepares us properly for the adult usage market, the strains that MedReleaf has managed to grow are the leading strains in this country, arguably in the world,” said Terry Booth, Aurora’s CEO.

Ontario is Canada’s most populous province, accounting for roughly 40% of the nation’s gross domestic product.

Aurora Cannabis and MedReleaf are the second and fourth largest Canadian marijuana companies by market capitalization. Combined, they have the potential to outgrow industry leader Canopy Growth Corporation, which is currently worth $6.45 billion. Taking today’s prices into account, the newly merged company is capitalized at more than $7 billion.

That said, Aurora Cannabis has emerged as the largest pure play cannabis company in the world, earning that distinction through a series of key acquisitions. By purchasing MedReleaf, the company has given itself a strong foothold in the medical marijuana sector.

Marijuana Stocks Outperform

North America’s marijuana industry gained on Monday, as news of the Aurora-MedReleaf deal made its way to investors.

The North American Marijuana Index rose 2.2% to close at $256.64, its highest settlement in a month.

MariMed Inc. (MRMD) and OrganiGram Holdings Inc. (OGI) were the top performers, gaining 14.4% and 11.1%, respectively.

Cronos Group (CRON) jumped 7.2% and Canopy Growth Corp (WEED) added 6.9%.

Merger news failed to lift Aurora Cannabis (ACB), as share prices fell 2.1% on Monday.

The Canadian Marijuana Index, which is capitalized at $24.41 billion, rose 2.9% to $660.35. Meanwhile, the $6.82 billion U.S. Marijuana Index added 1.2% to finish at $90.20.

Cannabis stocks outperformed Wall Street by a wide margin on Monday. The S&P 500 Index gained just 0.1% during the session.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 546 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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