Marijuana News Today: Despite Legalization, Pot Stock Market Drop…

Marijuana News Today

As you would expect from the marijuana news today, we’re covering the federal legalization of marijuana in Canada and the interesting pullback we’re seeing across the pot stock market.

With marijuana now officially legalized in Canada, you would have expected to see a jump in marijuana stock value. Instead, we’re seeing a fairly substantial drawback in multiple companies, with many losing anywhere from five percent to 10% during early-morning trading.

This isn’t entirely unexpected, however.

The gains from marijuana legalization have been priced in for some time now, so it makes sense that we’re not seeing a massive rush on the pot stock market.

The pullback is a little unexpected, however. At least, it is at this magnitude.

In any case, this fall will be a blip as the marijuana industry officially sets off down a path that will see billions of dollars in revenue begin to pour in as the Canadian market gets off and running.

Of course, as I’ve been saying for many months now, Canadian marijuana legalization is about far more than just the Canadian market.

The important thing now is to closely observe just how well Canada can implement marijuana legalization across its lands.

If major tax revenue pours in while crime drops—two of the biggest projected benefits from state legalization—then you can expect there to be other countries that point to Canada as a successful model for marijuana legalization.

This will, in turn, speed up the legalization process in other countries and begin to expand the marijuana market.

If, on the other hand, Canada is fraught with problems and miscalculations following marijuana legalization, then we very well may see a dampening of the more vigorous calls for marijuana legalization across the globe.

That makes these next few months critical for the global pot trade.

Canada needs to make a strong showing here, with firm and consistent laws regulating pot.

Of course, these laws will naturally be uneven as marijuana is being regulated by the provinces. There’s still a strong opportunity here for good governance to win out and not only benefit its constituents via increased tax revenue and lower expenditure on crime, but help boost the profile of legalized pot and prove that it does indeed work.

If that all goes according to plan, then Canada could become the central hub of the marijuana industry for years to come.

Canopy Growth Stock

As mentioned at the outset of this article, the marijuana industry is seeing an industry-wide pullback of several percentage points near-universally across many pot stocks.

Canopy Growth Corp (NYSE:CGC) is one of those hard-hit marijuana stocks, although CGC stock has not dropped as much as some of its rivals.

CGC stock fell about three percent in early-morning trading, which is an improvement from when it started the day down about five percent.

This could indicate that by the end of the day, we’ll see CGC stock make a full rally into the positive, but it’s hard to project the daily movements of the industry.

In any case, CGC stock is still up about seven percent over the past five days and remains one of the most exciting marijuana stocks around.

The company recently completed an acquisition of U.S. hemp producer ebbu LLC. This move once more builds on Canopy’s already strong presence in the marijuana market by diversifying its product line, allowing it to tap into the full potential of the cannabis industry.

While the future of marijuana stocks are now going to be reliant on numbers coming out of the Canadian market, I expect CGC stock to do just fine in the coming months.

Cronos Stock

Another company that finds itself down big this morning, Cronos Group Inc (NASDAQ:CRON), is similarly going to be subject to the figures that release post-Canadian legalization.

CRON stock dropped about five percent in early-morning trading, a vast improvement on the nine-percent fall it initially experienced, once again suggesting that a late-day rally may be in store for the pot stock market.

In any case, CRON stock has jumped up by about 12% over the past five days.

This was also helped along when the company scored a partnership with the Technion Research and Development Foundation of the Technion – Israel Institute of Technology to conduct research around CBD and its uses in skin care. (Source: “Cronos Group Inc. Partners with Technion Research & Development Foundation for Cannabinoid-Based Skin Care Treatments,” Cision, October 15, 2018.)

CGC & CRON Stock Performances

The CGC stock (black line) and CRON stock (blue line) performances from the past week are seen in the chart below:

Chart courtesy of StockCharts.com

Analyst Take

This is an auspicious day in the marijuana industry, pot stock market notwithstanding.

The event that so many have looked forward to for so long marks a key moment in the young pot industry; namely, that a powerful economic player like Canada has created a path for other countries to follow toward legalization.

If all goes according to plan—and there’s no reason at this point to expect otherwise—then we’re likely to see massive gains from the marijuana industry for years to come as more markets open themselves up to pot moving forward.