Marijuana Index Falls to Two-Month Lows as Cronos Becomes First Pot Stock to Trade on Nasdaq
Pot stocks were down across the board on Monday even as Cronos Group (MJN) achieved what no other company has: a spot on the tech-rich Nasdaq Composite Index. The Toronto-based cannabis producer will begin trading on the exchange Tuesday morning.
Marijuana Stocks Falter
The North American Marijuana Index, which tracks 39 top cannabis producers across the continent, fell 4.8% on Monday to $246.02. That was the lowest level since Dec. 26.
Huge losses were reported across the board, with Abcann Global Corporation (ABCN) and MYM Nutraceuticals Inc. (MYM) each falling double-digits percentage-wise.
Losses were evenly spread across U.S. and Canadian marijuana stocks. The U.S. Marijuana Index closed down 4.8% at $78.50, while the Canadian index fell 4.4% to $675.46.
The Canadian Marijuana Index has a capitalization of more than $23 billion spread out across 24 companies. This includes industry leaders such as GW Pharmaceuticals Inc. (CNX), Canopy Growth Corporation (WEED) and Terra Tech Corp (TRTC).
By comparison, the U.S. index tracks 15 companies with a combined market cap of around $5 billion.
Cronos Achieves Major Milestone
By listing on the Nasdaq, Cronos has set the bar high for marijuana companies. The timing couldn’t be better. Investors across North America are looking to raise their stake in Canadian cannabis stocks ahead of the country’s planned legalization this summer.
Interestingly, Cronos is more integrated in the medical marijuana business as opposed to recreational pot. Medical weed has been fully legal in Canada since 2001.
According to the official website, Cronos is “a geographically diversified and vertically integrated cannabis group that operates within Health Canada’s Access to Cannabis for Medical Purposes Regulations and distributes globally.”
The company will trade shares on the Nasdaq under the ticker symbol CRON. It will also continue to trade on Toronto’s TSX Venture Exchange, where it gained 10.8% on Monday.
CEO Mike Gorenstein recently told VICE Money that, despite being a Canadian company, the majority of Cronos’ investors are in the U.S. Recreational weed is legal in only nine states, but medical marijuana is allowed in 29 states. The tide of legalization appears to be sweeping across the country despite the U.S. Justice Department’s surprise decision to repeal an Obama era policy that limited the enforcement of federal cannabis laws.
The repeal was initiated by Attorney General Jeff Sessions, who issued a one-page letter explaining the government’s renewed push for prohibition, even in states where recreational pot is legal. The decision was met with criticism from both sides of the aisle. Colorado Republican Senator Cory Gardner was especially concerned with the administration’s new direction.
“Why is Donald Trump thinking differently than what he promised the people of Colorado in 2016?” he said in a speech from early January. “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.”
We speculated back in January that Sessions’ decision is unlikely to deter the U.S. cannabis market. Eighty years of pent-up demand for recreational weed, combined with strong commitment at the state level to fight prohibition, suggest the market will move full steam ahead.
The U.S. cannabis market is said to be worth more than $6 billion, according to investment bank Cowen & Co. That figure could rise to $50 billion in just eight years.
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