Marijuana News Today: Stock Market Recovers and U.S. Marijuana Laws Expand

Marijuana News Today

In the marijuana news today, we have the expansion of medical marijuana laws in Texas while the pot stock market stages a rally following a tough start to the week.

In the “Lone Star State,” we see continued progress made on the state level toward marijuana legalization, with Texas voting in its House to expand medical marijuana availability. (Source: “Texas House OK’s two bills to expand state’s medical marijuana law,” Dallas News, May 8, 2019.)

The move comes as more and more states are warming up to pot and even national figures are beginning to put their heft behind marijuana reform.

Texas, it’s worth noting, is not a Democrat state, making this an increasingly bipartisan issue.

Remember that there are a fair few Republican lawmakers who have come out in support of marijuana reform, which means that federal legalization could be a lot closer than many think.

In any case, this news is great for marijuana stocks.

As the U.S. continues to open up its market to legal cannabis, there will be more and more opportunities for companies to enter individual states and get a head start on establishing a foothold.

We’ve already seen larger U.S. marijuana companies begin to aggressively expand in 2019. This is in direct contrast to the more skittish behavior of these companies in the past, when the legal prohibition on weed would make them think twice before expanding.

After all, banking is already a headache for many pot companies as it stands now; crossing state lines with your business while making use of an unfriendly banking system is often more than a marijuana company wants to take on.

But with a relaxed attitude toward pot taking hold, these companies are more motivated than ever to get involved in the state trade of marijuana.

It’s worth noting that Texas has both a huge population and a very rich market that would make it a prime location to boost marijuana sales.

While the real change will still have to come at the federal level, states like Texas, New York, New Jersey, Illinois, and several others have signaled their intention to relax marijuana laws this year, which is no doubt going to be a boon for pot stocks, both in the present and the future.

CGC Stock

On the marijuana stock market, we have more good news, as it is finally beginning to stabilize today. After a few pullbacks this week, we saw pot stocks show healthy, if small, gains this morning.

Canopy Growth Corp (NYSE:CGC) was up about one point in early-morning trading today. The stock fell by 5.5% over the past five days though.

However, CGC stock remains one of the strongest plays in the market right now.

While Canopy Growth’s deal with Acreage Holdings Inc (OTCMKTS:ACRGF, CNSX:ACRG.U) was a savvy move by the company, the real reward for Canopy will not come for some time yet because the acquisition was predicated on federal U.S. marijuana legalization.

Still, as far as potential goes, last week’s move to buy Acreage in the future is a very strong one for Canopy Growth, which is looking to leverage the acquisition into a dominant foothold in the U.S. market.

Canopy Growth Corp has the option to purchase Acreage Holdings for $3.4 billion, with a mandate to exercise that right when cannabis production and sale becomes federally legal in the United States. (Source: “Canopy Growth Announces Plan To Acquire Leading U.S. Multi-State Cannabis Operator, Acreage Holdings,” Canopy Growth Corp, April 18, 2019.)

Aside from that blockbuster acquisition, there hasn’t been much noise out of CGC stock this week.

Nevertheless, Canopy Growth is still one of the strongest pot stocks on the market right now, and I believe that bigger gains are on the horizon for the stock as 2019 progresses.

ACB Stock

Another company that has been rather quiet lately is Aurora Cannabis Inc (NYSE:ACB). ACB stock gained over one percent in early-morning trading today and finds itself down 3.5% over the past five days.

What’s interesting about Aurora Cannabis is that the company was known for its aggressive acquisition strategy in 2018. It seemed that every month, Aurora was making some new buyout of a competitor.

That has since subsided in 2019, and that’s likely for the best. The company was prone to making swing-for-the-fences types of deals when they simply weren’t warranted. Those deals certainly didn’t help Aurora stock prices in 2018.

While the company has failed to register some of the big wins that competitors like Canopy Growth have netted, Aurora Cannabis is still full of potential and it doesn’t need to keep making headline-grabbing deals to remain relevant.

This change of pace for Aurora—a quieter and more sustainable path—is one that I’m coming to like. Which isn’t to say we don’t want to see big moves from the company. Instead, it means we want to see the big moves come at the right time.

TLRY Stock

One company that could do with a big swing is Tilray Inc (NASDAQ:TLRY). Tilray stock fell by nearly two percent in early-morning trading today. Over the past five days, TLRY stock is down 11%.

In my mind, Tilray remains one of the most concerning companies in 2019. The stock is simply too highly valued to be a worthy investment at this point, as evidenced by its steady decline since its initial public offering.

While we haven’t seen a wild descent with Tilray stock, the slow drip has taken its toll on its share price. The stock is bleeding out long and slow, and until the company can suture the wound, that bleed will continue.

There are a few ways that TLRY stock could bounce back—a major partnership or acquisition might help align the company with its valuation—but until then, expect the fall to continue.

CGC, ACB, and TLRY Stock Performances

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

Chart courtesy of StockCharts.com

Analyst Take

The marijuana news today is, on the whole, positive.

States like Texas are part of a new wave of marijuana reform supporters. No longer relegated to the coastal Democratic states, Republican strongholds are now also getting in on the legal marijuana trade.

Couple this with a strong rally from marijuana stocks this morning and we have a good Wednesday.