Marijuana News Today: Pot Legalization Spreads, Weed Stock Market Rises

Marijuana News Today

It’s an all-around great start to the week in the marijuana news today. There are strong gains in the pot stock market and news that Mexico is likely to pass pro-marijuana legislation by the end of 2019.

The battle to legalize—or at the very least decriminalize—pot in Mexico has been taking place for more than a decade. But while past governments were considered hostile to marijuana, the current president, Andrés Manuel López Obrador, is considered to be more friendly toward the substance.

One of Obrador’s proposals is to decriminalize and regulate illicit drugs in order to strip criminal organizations of their power and a huge source of their income. (Source: “Medical Cannabis Coming to Mexico, Maybe Decriminalization Too,” Leafly, September 3, 2019.)

This is a long time coming for Mexico. The country first decriminalized marijuana and opioids way back in 1940, but under pressure from the U.S., Mexico quickly reversed that decision.

It is estimated that Mexico is the second-largest marijuana producer in the world, largely due to climate and cheap labor. Some projections, meanwhile, place the market for legal marijuana in Mexicon as high as $12.0 billion by 2029, which would be a huge win for pot stocks.

Mexico wouldn’t be able to rival the U.S. when it comes to impact on marijuana stocks, but it is by no means an insignificant market. If Mexico legalizes pot, which would be a likely outcome following decriminalization, then we could see weed stocks experience a massive boost in price.

Meanwhile, the move would also sate the eager investors who want to see major developments in the marijuana industry now that Canadian legalization has come and gone. Many are hungry for the next big marijuana moment on the horizon, and Mexico could definitely slot in here as a filling appetizer.

Another boost to marijuana stocks that would come from Mexico legalizing cannabis is less concrete but no less important: pressure.

If Mexico legalizes marijuana, that would leave the U.S. as the only country in North America that has a federal prohibition against pot. The U.S. rarely likes to come in last place, but it’s looking increasingly apparent that it will indeed be the last country on the continent to federally legalize pot .

While likely not enough to outright motivate marijuana legalization on its own, the event would increase the already building pressure for the U.S. to make a substantial legislative move on pot in the near future.

HEXO Stock

The marijuana news today, as promised, is very positive regarding the pot stock market. Early-morning trading saw many pot stocks surge, with almost every major stock seeing some gains.

One marijuana stock that I’ve long been bullish on is rewarding investors with very strong gains today: Hexo Corp (NYSE:HEXO).

HEXO stock gained about five percent in early-morning trading, jolting to a near-seven-point gain over the past five days.

Hexo Corp, I’ve long told investors, is right now one of the best investment opportunities in the industry. The reasons for that are myriad, but I’ll cover the major ones.

HEXO stock, leading into the most recent marijuana stock market correction, had long been said to be one of the more undervalued pot stocks. As such, there was already a fair bit of buzz surrounding the company. Fast-forward to now and you have a severely discounted stock that was already said to have been a bargain.

In other words, right now, HEXO shares are trading at a massive discount that will likely reward long-term investors with big gains.

To make things even better, Hexo Corp is a very stable company. It has some of the best supply agreements in the business and has a strong production capacity that will allow for growth. Those two factors combine to make HEXO stock a strong opportunity indeed.

Overall, Hexo is full of potential, and right now may be one of the better times for investors to get in on the company in a long while.

ACB Stock

HEXO stock isn’t alone in starting the week off strong; Aurora Cannabis Inc (NYSE:ACB) also saw gains come its way.

ACB stock jumped by more than three percent in early-morning trading today. Over the past five days, however, the stock has struggled, down five percent.

The reason for the recent fall has to do with the company’s weak quarterly report.

Aurora Cannabis Inc saw a net loss of CA$2.3 million on net revenue of CA$98.9 million, with an adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) loss of CA$11.7 million. (Source: “Aurora Cannabis stock drops after earnings, as pot sales miss revised target,” MarketWatch, September 12, 2019.)

To make matter worse, Aurora failed to meet even its readjusted targets. Analysts surveyed by FactSet Research Systems Inc. had estimated adjusted losses of CA$0.06 per share on revenue of CA$108.0 million. Those targets were lowered by Aurora prior to its financial report being released.

That disappointment derailed the company’s current projections, sending its shares falling and dissuading investors from reinvesting in ACB stock.

While I doubt the damage will be long-lasting, what Aurora Cannabis Inc needs to do now is score a win with its next quarterly report. If that happens, I anticipate a healthy recovery for Aurora Cannabis stock. If, however, the company once more fails to meet expectations, then ACB stock could be in for a long decline.

HEXO and ACB Stock Performances

The performances of HEXO stock (black line) and ACB stock (blue line) over the past week are seen in the chart below:

Chart courtesy of StockCharts.com

Analyst Take

The legal marijuana market is nowhere near done expanding. The recent news out of Mexico further cements that truth.

With progress being made toward legalization around the globe, marijuana stocks are poised for long-term growth. Meanwhile, the pot stock market today is going strong, seeing impressive gains across the board.