Marijuana News Today: New York Looking to Legalize Recreational P…

Marijuana News Today

The marijuana news today is a first for 2019—a U.S. state announces that it is looking to legalize pot in the new year.

This time, we’re seeing New York state finally come to the table with legislation that would legalize the drug for recreational consumption.

This was a long time coming as New York City had long ago begun instituting its own reforms that, while short of legalizing marijuana, did much to help lessen the legal burden of being caught with smaller amounts of pot.

Governor Andrew Cuomo unveiled the marijuana legalization plans for New York, including the age limit (21), how marijuana offenses on personal criminal records would be sealed, and that the state would hope to generate around $300.0 million through taxes via the drug. (Source: “Cuomo unveils plan to legalize recreational marijuana use,” Albany Times Union, January 15, 2019.)

While all this is good news for the marijuana industry, there is one notable drawback to the state’s proposed plan: it limits producers from also owning retail outlets.

The Province of Ontario in Canada has a similar limit in effect, with producers allotted only a single brick-and-mortar location from which to sell.

The thinking behind such a regulation is to encourage smaller businesses and craft growers to develop while preventing larger marijuana producers from muscling out the little guys.

It’s an admirable goal, sure, but one that will no doubt limit some of the success of the larger marijuana stocks in the state going forward…provided that the legislation passes with that part intact.

The marijuana companies immediately affected by that part of the legislation are the in-state medical marijuana producers that would look to expand into recreational pot. They may not be able to open their own retail locations, although they are likely lobbying to have that changed.

All the same, the limit on producers opening retail locations won’t be calamitous even if it does pass, as marijuana growers would still be able to sell their product via other retail locations—they would simply miss out on the branding opportunity of owning one’s own marijuana store.

That means, across the board, this is a huge win for the marijuana industry and, hopefully, many U.S. states will seek legalization in 2019.

CGC Stock

New York marijuana legalization is by far a bigger event in the marijuana news today compared to the muted performances on the pot stock market.

Shares are sleepy in early-morning trading, with not a whole lot of movement to be seen.

Canopy Growth Corp (NYSE:CGC), for instance, climbed one percent in early-morning trading, with most other pot stocks faring about the same.

Over the past five days, of course, CGC stock has been singing a different tune; the company is up 25% over that time.

And that’s no surprise.

I don’t think a single marijuana stock has had a better opening to 2019 than Canopy.

Sure, other pot stocks may have outperformed CGC stock to start the year, but in terms of building momentum and potential, few can rival the industry leader.

Canopy was the recipient of a huge bank investment as well as Wall Street analyst backing, and it is leading the pack when it comes to entering the U.S. market via hemp (now legalized with the U.S. Agriculture Improvement Act of 2018).

For all those reasons above, CGC stock has had a roaring start to 2019…and I expect to see those gains continue throughout the year (with unavoidable ups and downs along the way, to be sure).

ACB Stock

While CGC stock has had the best start in 2019, Aurora Cannabis Inc (NYSE:ACB) is not too far behind.

ACB stock made waves when it acquired Whistler Medical Marijuana Corp. earlier in the week.

The acquisition is expected add over 5,000 kilograms per year of cannabis to Aurora’s production capacity when Whistler’s second location reaches full capacity. (Source: “Aurora Cannabis buying Whistler Medical Marijuana in deal worth up to $175M,” Global News, January 14, 2019.)

The company then followed that strong purchase up with an announcement that it was looking to enter the U.S. hemp market—again, via the Agriculture Improvement Act of 2018 that legalized the plant’s production.

ACB stock, as a result, has had great success to start 2019.

Over the past five days, ACB stock jumped 34%.

Even today, where marijuana stocks have been sleepy, ACB stock saw impressive returns with a near-four-percent jump in early-morning trading.

While I’m still more bullish on Canopy compared to Aurora due to the former’s Big Alcohol partnership and overall superior fundamentals, there’s still a lot to like about ACB stock moving forward.

CGC and ACB Stock Performances

The performances of ACB stock (black line) and CGC stock (blue line) over the past week are seen on the chart below.

Chart courtesy of StockCharts.com

Analyst Take

New York marijuana legalization would make it the 11th state to formerly legalize recreational pot.

Furthermore, it is doing so through legislature, rather than via a referendum. This means that political support is building behind pot legalization.

The marijuana news today—the boring pot stock market aside—is very rosy, and the industry has had a blistering start to 2019. It’s looking like 2019 is going to be a very good year for pot stocks in general, provided the broader stock market can stay on track and avoid a downturn.