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Marijuana Stocks Continue to Grow Ahead of California’s Planned Legalization

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Marijuana stocks powered to new highs on Tuesday, as investors rallied behind the planned legalization of recreational cannabis in California next month.

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Marijuana Index Rises Again

The closely watched North American Marijuana Index rose 5.5% on Tuesday to close at 189.58, which was enough for a new all-time high. The index has been on an absolute tear the past six weeks, having gained nearly 70% since Oct. 26. For the year, the index has returned roughly 32%.

Despite all the optimism surrounding the U.S. industry, it was Canadian stocks that did much of the heavy lifting in the early part of the week. Currently, the North American index is comprised of 35 companies. This includes well capitalized companies such as CannTrust Holdings Inc. (TRST) and  Cronos Group Inc.  (MJN).

The more segmented Canadian Marijuana Index added 8.3% on Tuesday to finish at 504.97. By comparison, the U.S. Marijuana Index added just 1.5% to 65.53.

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In California, Full Legalization Nears

Beginning Jan. 1, Californians will be able to buy cannabis recreationally, a move that analysts say will kick start a multi-billion-dollar industry in the state. It’s a date that marijuana consumers and businesses have been waiting for since Proposition 64 was officially passed on election day 2016. After more than a year of speculation and anticipation, full-scale legalization is merely weeks away.

The green plant will be regulated by the state’s Bureau of Cannabis Control which, among other things, is responsible for licensing dispensaries and other cannabis-based businesses. In just a few weeks, any Californian aged 21 and over will be able to walk into a dispensary and purchase week, provided that the business has a temporary license from the state.

That being said, state-wide roll out is expected to be slow. Currently, only Oakland and a few Desert Hot Springs’ locales in the Coachella Valley have adopted formal rules governing the green plant. Others, such as Sacramento and San Jose, haven’t done much. Other regions, such as Kern County, have banned marijuana sales after voting against Proposition 64.

California has long been considered a major catalyst for the pot industry’s future growth. It is estimated that traditional marijuana buds (i.e. flowers) alone generated $375 million worth of sales in the second quarter alone. According to BDS Analytics, flower sales represent 55% of the state’s cannabis market. That means you are already looking at a multi-billion-dollar industry with plenty of room to grow.

When it comes to marijuana, “flower” isn’t a terribly descriptive term. In fact, the researchers at BDS say they track the sales of 13,000 unique strains that fall under the generic flower description.

Featured image courtesy of Shutterstock. 

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4.5 stars on average, based on 348 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 Case for Marijuana Stocks Is Growing

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The marijuana industry is abuzz with optimism again. Looming legalization in Canada, cutting edge research and development and a pivotal shift in favor of state rights in the Trump White House have all raised the stakes for cannabis stocks. These developments could generate an industry worth $47 billion annually in about ten years, according to ArcView.

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Trump’s Decisive Move

President Donald Trump made a bold move earlier this month by reversing a Justice Department proposal to crack down on the marijuana industry. In doing so, he may have ended a looming legal battle between states that have legalized recreational marijuana and federal prosecutors who want to enforce national laws against them.

Perhaps more interesting is the fact that Trump made the decision without consulting Jeff Session, the Attorney General who decided back in January that Obama-era guidance was not needed. This meant that federal prosecutors could pursue legal action against marijuana growers even in states where the substance is legal.

Colorado Republican Senator Cory Gardner was instrumental in convincing the Trump administration to abandon the Justice Department’s proposal. Legal weed sales have generate $1.5 billion for the state since prohibition ended in 2014.

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Cannabis and Pharmaceuticals

Pharmaceuticals account for the largest share of established marijuana companies when measured by market cap. The sub-sector is primarily involved in cannabinoid research to treat ailments like cancer, epilepsy, multiple sclerosis and other chronic pains. Now, a prominent researcher is on the verge of getting FDA approval for a cannabinoid-based drug.

The company is GW Pharmaceuticals (GWPH) and the drug is Epidiolex, which is designed to treat childhood-onset epilepsy. The FDA is expected to reach a decision on the drug by the PDUFA deadline of June 27. PDUFA dates usually give federal regulators ten months to review new drugs. Priority drugs are given a six-month review window. FDA approval of the drug would not only boost GW share prices, but catalyze the entire industry.

Other prominent cannabis drug researchers include Insys Therapeutics (INSY) and Axim Biotechnologies (AXIM).

Canada Leads the Charge

Marijuana legalization has been high on the government’s agenda since Justin Trudeau took office in 2015. Although the timeline for legalization has been pushed back, Canadians will still be able to buy weed legally this year.

A final Senate vote on the mater is scheduled for June 7, with full legalization to commence shortly eight-to-12 weeks later. Although the Conservative party is opposed to legalization, the Senate is expected to pass the measure easily.

Legalization will open the door to a $5 billion industry, leading to direct and indirect spending that could add billions more.

Canada’s Marijuana Index is currently valued at $24 billion, much higher than the still-underdeveloped U.S. equivalent. Some of the most active companies on the Canadian cannabis scene include Aurora Cannabis (ACB), Canopy Growth Corporation and Aphira (APH).

The North American Marijuana Index rose 1.3% on Thursday to settle at $256.32. The Canadian Index advanced 1.4% to $652.46. By comparison, the U.S. S&P 500 Index fell 0.6% and the TSX Composite Index closed down 0.5%.

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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4.5 stars on average, based on 348 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

President Trump Ditches Clampdown on Legal Marijuana

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U.S. President Donald Trump has abandoned the Justice Department’s proposed crackdown on recreational marijuana, giving states that legalized the drug complete discretion to administer its use. The decision ends months of uncertainty over whether federal drug laws would impede on states that have already voted in favor of legalization.

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Reversing the U-Turn

White House sources confirmed on Friday that the president would not be taking the advice of Attorney Jeff Sessions, who in January reversed Obama-era guidance on cannabis laws. In a one-page letter, Sessions said he would allow U.S. attorneys to enforce marijuana prohibition to the fullest extent of the law. This effectively meant that marijuana businesses in states where the substance is legal could still face federal raids and prosecution.

The decision to end the crackdown emanated from Trump himself after meeting with Republican Senator Cory Gardner, who hails from the pro-cannabis state of Colorado.  Gardner was a staunch critic of the Justice Department’s policy u-turn, calling it “a trampling of Colorado’s rights.” He retaliated by blocking Justice Department nominees.

The state of Colorado has generated hundreds of millions of dollars in revenue from recreational marijuana sales. Interstate traffic, especially from New Mexico and Texas, helped to generate $1.5 billion in sales last year.

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Gardner says he was assured that federal laws would not interfere with Colorado’s booming marijuana industry and that President Trump would promote a new law that gives states the authority to formulate their own policies on the matter.

Several U.S. states backed legalization during the 2016 election cycle, including California, Nevada, North Dakota, Main and Massachusetts. Recreational weed is also legal in Washington, Oregon, Alaska and Colorado.

Marijuana Industry

President Trump’s decision to back state-level cannabis regulation sent marijuana stocks soaring in Friday’s session, which was characterized by widespread losses on Wall Street.

North America’s Marijuana Index, which tracks 42 leading cannabis stocks, surged 10.1% to $257.87. That was its highest settlement since Mar. 20.

The smaller U.S. index rose 14.9% to $91.76, with 16 of 19 companies reporting gains.

Meanwhile, Canada’s version of the index climbed 6.5% to $646.86.

Analysts say Trump’s renewed commitment to state rights is a game-changer for the industry, especially in California, a state with a bigger population than Canada. Greater certainty around state administration of cannabis laws could boost investment and business growth in state-legal markets.

Cannabis stocks surged to record highs in the new year before legal concerns and signs of overvaluation triggered a broad retreat in the market. However, as of Friday’s close, marijuana stocks had advanced in four straight sessions.

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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4.5 stars on average, based on 348 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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Canada’s Marijuana Sector is Becoming More Attractive

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Canada’s dynamic cannabis sector is getting more attention from investors, even as concerns of overvaluation and strained supply continue to weigh on stock prices. Beyond the ticker symbols, marijuana investors are envisioning an industry that could eventually rival alcoholic beverages, especially among younger cohorts.

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The Marijuana Index

Marijuana investments steadied on Wednesday, bringing cautious optimism that the month-long downtrend could be coming to an end. Canada’s Marijuana Index, which is comprised of 25 companies worth a collective $21 billion in market cap, closed at $609.56, where it was virtually unchanged compared with the previous close.

The index experienced dramatic fluctuations throughout the day, reflecting a highly volatile North American stock market on Wednesday. The index touched a low of 546.46 after the open before rebounding more than 8% by the close.

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In terms of individual stocks, WeedMD Inc (WMD) gained more than 18%. The penny stock is officially certified by Health Canada to produce medical marijuana, an industry that first achieved legalization almost two decades ago. Axim Biotechnologies Inc (AXIM) gained nearly 15.8% while CV Sciences (CVSI) added more than 7%.

More established marijuana stocks like Aphira Inc (APH), Aurora Cannabis Inc (ACB) and Canopy Growth Corporation (WEED) closed in negative territory.

The much smaller U.S. version of the index, which contains 17 constituents collectively valued at $5.3 billion, rose 0.6% to $73.33.

Canada’s Budding Pot Market

While favorable legislation has made Canada a top contender to become the Silicon Valley of marijuana, some say the sector is relying too much on hype and speculation. When the marijuana index was valued at more than $30 billion, it was worth half the market capitalization of the nation’s more established gold mining industry.

That said, other nations are watching Canada’s experiment with recreational cannabis very closely because they know it could mean big business. According to Daniel Pearlsteinof Eight Capital, Canada’s retail marijuana sector could hit $9 billion annually in just a few years.

Recently, Constellation Brands (STZ), a U.S. alcohol giant, predicted that global cannabis sales could reach $200 billion in 15 years. That’s a huge source of revenue for governments.

Constellation also estimates that U.S. cannabis sales already generate $50 billion every year, which is about $10 billion lower than wine and a$ 25 billion shy of tobacco. It therefore comes as no surprise that the company recently invested $191 million in Canopy Growth Corp.

As marijuana edges closer to full legalization, stocks that are involved in the sector will likely gain more legitimacy. Cronos Group made history earlier this year when it became the first Canadian weed grower to list shares on the U.S. Nasdaq exchange. The company also trades in Canada and Germany.

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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4.5 stars on average, based on 348 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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