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Marijuana Stocks Rebound as Trudeau Government Looks to Expedite Legalization

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Marijuana stocks outpaced the broader market on Tuesday, as the Canadian government took a rare step to expedite the legalization of recreational cannabis later this year.

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Pot Sector Rises

The North American Marijuana Index rose 11% to $289.21, more than offsetting Monday’s sharp drop. The index is down 9% over the past five sessions as Wall Street suffered its worst declines in over six years.

Most of the gains occurred north of the border, with the Canadian pot stocks adding more than 14%. The Canadian Marijuana Index has 24 constituents and a market cap of $25 billion.

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Canada on Target for Legalization

On Tuesday Canadian Prime Minister Justin Trudeau took decisive measures in expediting the passage of legislation that would open up the nation to recreational marijuana. The head of the Liberal government has appointed four cabinet members to the nation’s Senate in an effort to push the legalization bill forward.

Although the senators haven’t committed to passing legislation quickly, their appointment suggests Trudeau is seeking to remove obstacles to legalization by July 1. That’s the day Canada is set to become the first Group of Seven country to legalize recreational cannabis.

“We are confident that we are on track” to legalization, said Justic Minister Jody Wilson-Raybould, as quoted by Bloomberg. “I am confident that we will be in a place for the legalization of cannabis, July of 2018, and that a responsible process for implementation of the act will continue thereafter.”

Huge Market Potential

Investors, businesses and consumers are excited about what legalization will bring to the economy, with various estimates calling for a multi-billion-dollar market in the not-too-distant future. Deloitte says Canada’s pot economy is worth up to $8.7 billion. When factoring ancillary services and other multipliers, the total market could be worth as much as $22.6 billion.

Legalization is also catching wind south of the border, where nine states and D.C. have passed laws permitting recreational use. What’s more, support for the drug rose to all-time highs in 2017, with a Gallup poll showing nearly two-thirds of Americans in favor of legalization.

However, legalization faces more obstacles in the United States than in Canada. Last year, U.S. Attorney General Jeff Sessions reversed Obama-era guidance on marijuana laws, signaling a renewed crackdown on the drug. The policy shift maintains the federal government’s enforcement of prohibition despite broad legalization across several states. Several pro-marijuana states have already signaled their discontent, setting the stage for a debate that extends far beyond marijuana and into state rights.

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 415 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.

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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.

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“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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4.5 stars on average, based on 415 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 415 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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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 415 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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