Marijuana News Today: Tilray Stock Continues to Fall Despite Upcoming Marijuana Legalization

Marijuana News Today

This is not the ideal start to the week for the pot sector, with the marijuana news today showing severe dips in Tilray Inc (NASDAQ:TLRY) and Cronos Group Inc (NASDAQ:CRON), as well as a moderate pullback in the overall marijuana stock market.

Although Tilray stock and Cronos stock have been falling, the outlook for pot stocks in the coming months is still looking bright.

Two major events on the horizon have huge potential to drive marijuana stock value: Canadian marijuana legalization and the U.S. midterm elections.

For obvious reasons, Canadian marijuana legalization is going to be a boon for marijuana stocks. In fact, Canada’s announcement a few years ago that cannabis would be legalized at a federal level is what helped spark the surge in the industry in the first place.

With the vast majority of marijuana stocks trading publicly being Canada-based, we have what is likely one of the largest positive developments in the sector to date.

With October 17 fast approaching, we will probably see another bull run in the marijuana market.

While I believe that the strength of these gains will be tempered by the fact that the cannabis industry went on an incredible run in August—and my view that the market isn’t quite ready for another surge of that magnitude—I do believe that stock prices will rise by solid double-digits in the lead-up to legalization.

The next major event that marijuana investors ought to keep an eye on is the U.S. midterm elections.

Politics can so often have an outsized impact on marijuana stocks. And that goes double for any political happenings in the U.S. surrounding pot.

In this case, for the first time in history, an American political party—the Democrats—is actively seeking to push through comprehensive pot reform.

Many of the Democratic Party leaders have made pot legislation one of their talking points in recent months. While talk is cheap, it still represents strong progress from the days when support for a total ban on marijuana was the norm among both parties.

The midterm elections, meanwhile, offer a substantive chance for the Democrats to take back both the House and the Senate.

Should the Democrats assume total control of Congress, there’s a chance that we may see marijuana reform pushed through on a much shorter timeline than we previously thought possible.

President Donald Trump has been flaky when it comes to a defined position on pot, but it seems unlikely (given his recent statements) that he would veto a marijuana reform bill. That means a simple majority would be all it takes for the Democrats to push through marijuana reform.

Should the Democrats assume control of Congress, we could very well see massive political gains for pot in the U.S.

Tilray Stock

The most volatile marijuana stock in the market continues apace in the marijuana news today, with Tilray stock down another 10% in early-morning trading.

What we’re experiencing here, ladies and gentlemen, is the law of gravity applied to the stock market: what goes up must come down.

Tilray stock was always going to have a correction. Think of it as being pulled over for speeding; it’s simply impossible for a stock value to increase by 1,000% in about two months and not see some form of backlash from the market.

The volatility of TLRY stock has, of course, always been part of its charm. That’s why I’ve been rating it as one of the best short-term marijuana stocks. And that still holds.

Whether you’re a short seller or a day trader, both avenues offer strong paths to gains if your timing is right. The only problem is that figuring out the right timing is very tricky indeed.

That’s one of the major reasons I’ve been reluctant to recommend Tilray stock as a long-term investment; there’s simply too much volatility to be able to confidently get a handle on the stock’s future.

While I’m confident that Tilray will bounce back from its precipitous falls, TLRY stock is likely to be one of the most unwieldy in the stock market for some time.

Canopy Growth Stock

While Tilray stock—and the marijuana stock market as a whole—is down to start off this week, one marijuana stock that found itself in the green in early-morning trading today was Canopy Growth Corp (NYSE:CGC).

While Canopy Growth stock was only up about one percent to start the day, that’s a good deal better than being down by double-digits. I realize that’s not exactly hard-hitting analysis, but an examination of the stock chart below will show you why I’m much higher on CGC stock than TLRY stock long-term.

While Tilray stock has had massive upswings and huge single-day gains, over the past five days, Canopy Growth stock has actually surpassed Tilray—with a gain of about four percent compared to Tilray’s loss of about six percent.

It’s clear that CGC stock is the more established, stable, and predictable stock.

It’s not as strong of a short-term play, certainly, but Canopy Growth stock continues to be one of the best long-term options in the legal marijuana industry.

TLRY & CGC Stock Performances

On the chart below are the recent performances of Tilray stock (black line) and Canopy Growth stock (blue line).

Chart courtesy of StockCharts.com

Analyst Take

With so many good things on the horizon for the marijuana industry, this mini-correction we’re in is not likely to last long.

Between the huge potential political boon in the upcoming U.S. midterm elections, and the certain boost from Canada’s soon-to-be marijuana legalization, the marijuana industry is looking like it’s headed toward a very strong ending to 2018.

As for Tilray stock, estimating that company’s trajectory is an extremely difficult—if not futile—gesture. The only thing that’s certain with TLRY stock is uncertainty, which could lead to both exponential gains and calamitous losses.