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The Rise (& Immediate Fall) of Cannabis Stocks in 2018 So Far

Cannabis Stocks

Economics

The Rise (& Immediate Fall) of Cannabis Stocks in 2018 So Far

The stock market is notoriously fickle, and cannabis stocks are no exception.

Few things are more unpredictable than the endless spikes and plummets of the stock market. But being a publicly traded company has long been a benchmark of success and relative stability, which is why the availability of cannabis stocks is viewed by many as a key element of normalizing canna-businesses and securing a future for a national regulated market.

However, because of the conflict between federal and state law when it comes to cannabis in the United States, the only U.S. cannabis stocks available are offered by ancillary cannabis companies as Pink Sheets, also known as “penny stocks,” meaning they are not traded on a major exchange. These stocks must be purchased “over the counter,” and are a much riskier investment.

In Canada, however, where national legalization is already a reality, cannabis stocks are available for companies that deal directly with the plant and the shares are traded on major exchanges. And because California is the largest cannabis market on planet Earth, so what happens in the Golden State has an impact on the entire cannabis market, including Canada. So when California cut the ribbon on its adult-use regulatory framework on Jan. 1, Canadian cannabis stocks rallied at the news.

From Reuters:

“Cannabis producers Canopy Growth Corp WEED.TO and Aphria Inc APH.TO were among the biggest gainers on the Toronto Stock Exchange’s S&P/TSX composite index .GSPTSE, surging as much as 11.9 percent and 8.8 percent respectively… Aurora Cannabis ACB.TO, Canada’s second-biggest listed producer, closed up 20 percent. All hit record highs… Canada’s Horizons Marijuana Life Sciences ETF HMMJ.TO gained 10 percent. The U.S.-listed ETFMG Alternative Harvest ETF MJX.P, which began trading on Dec. 26, has risen to $164 million in net assets from $6 million in one week.”

But California isn’t an island, so that market — irrespective of size — is also vulnerable to fluctuations.

So just as Canadian pot stocks spiked on the roll-out of the Golden State’s legalization, they tanked after news broke that committed drug warrior Attorney General Jeff Sessions had rescinded the Cole Memo.

Although the immediate impacts of this dramatic move by the AG are still unknown — at press time there has been no enforcement action based on the new guidance — there was still an undeniable ripple of panic caused by the announcement.

Some market observers are urging caution, saying the best cannabis stocks don’t even exist yet. The main issue is the one that’s been dogging cannabis entrepreneurs since the 30s; prohibition. From the lack of traditional banking solutions for cannabis companies to their inability to write off basic business expenses because of IRS Code Section 280E, there are still many financial obstacles facing the emerging legal industry.

That said, many cannabis-oriented investors are eyeing the slump in stocks as an opportunity. The bet is that, as is generally the case, they will rise again. Mark Tepper, president and CEO of Strategic Wealth Partners, told CNBC that now is an ideal time to get in the game for those seeking a high-risk opportunity.

From CNBC:

“In 2017, these stocks were up 250 percent, and in light of the news [re: Cole Memo], these same stocks are down 10 to 40 percent… There’s just a lot of tax revenue that states would be missing out on, and it just seems really unlikely that Sessions wins here,” he said. “It’s a high-risk, high-reward play. For our clients, probably a little too high risk, but if you are interested in having some high-risk opportunities in your portfolio, this is probably a good buying opportunity.”

TELL US, have you invested or bought stocks in the legal cannabis industry?

6 Comments

6 Comments

  1. Richard Webber

    February 2, 2018 at 7:24 am

    I have positions in Aphria, Aurora, Organigram, Harvest and Supreme. With the exception of Harvest and Supreme my portfolios are up over 32%. Anyone interested in the Canadian cannabis market should jump on board now. This recent price adjustment come April/May will be a distant memory.

  2. Maxcatski

    January 17, 2018 at 7:24 am

    I am a Canadian cannabis consumer with Investments in fully legal Canadian cannabis stocks. My one-year return to December 2017 was 300%. The New Year saw a drop of about 30% but a rally has started. It’s a wild ride when these shares can rise or fall twenty or thirty percent – in one day! I look forward to full legalization in our country – and more action from my pot stocks!

  3. Christopher SImmons

    January 12, 2018 at 8:53 am

    An Alabama career politician has no business outside of Alabama. If you’re going to conduct ignorant, non-productive, harmful and non-beneficial policies, please do it in your own State of Alabama. We see your policies do their best in your own home state, as evident by the progressive nature of your state.

  4. Sonya Handley

    January 9, 2018 at 9:39 pm

    I am interested in investing in penny stocks for marajuana. I just need to know how to start and best way to invest

    • TerriAndrovics

      February 1, 2018 at 8:01 am

      Questrade is great…they give you a practice account to play with to get you stock trading skills then if and only if you want to you can set up a real account…I gained some confidence using this free trading platform…

    • Arlene

      April 11, 2018 at 5:22 pm

      The stash app is what I’m using. It makes it easy to see the options for investments

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