Most Cannabis Stocks Rise as Mexico Nods to Full Legalization

Soft Secrets
16 Mar 2021

Legal developments almost always influence the performance of cannabis stocks.

Make no mistake. Every time anything legalization newsworthy comes from the lawmakers, it impacts how cannabis stocks perform. So when the word came out that Mexico is going for full legalization, expectedily, stocks went up. Just a day after Mexican lawmakers on Wednesday (March 10) voted with 316 against 127 for a bill bound to legalize adult-use and medical marijuana, various cannabis stocks like Canopy Growth, Tilray, Aphria, Aurora Cannabis leaped with gains above 7%. The bill, which the Senate still should review to be turned into a law, will enable adults to purchase cannabis and cannabis goods, homegrow up to several plants, and run cannabis businesses. The business part is to be regulated with a licensing system where farmers can grow and sell cannabis, given that they have the license. Similarly, cannabis stocks also gained at the beginning of this year as President Joe Biden assumed office. Under his administration, it is anticipated that the U.S. will too move to legalize cannabis on the federal level entirely. After an initial bump in the stocks, the gains expectedly bounced back after some time. While great legality news always excites the stocks, other things hang in the air, which could partially answer why the momentum never lasts. For instance, even with legalization both happening in Mexico and assume later in the U.S., it is still far from clear how international trade laws will play out. Would it be easy to trade cannabis goods from one country to another? Would it pay for Canadian or U.S. investors to give money on infrastructure and expand their businesses in Mexico? Those are just a fraction of items that make the cannabis market one of the most volatile in the world, and why investing in it takes risks and a great deal of strategy. At the same time, there are a lot of opportunities. Some are better positioned than others to grow on those opportunities. Sister industries, like big tobacco, are, for instance, in a more favorable position, with more assets and significant wealth reserves to get involved and grow on cannabis. British American Tobacco is the freshest example. BAT is set to buy a stake of close to 20% in Canadian pot producer Organigram, a deal worth $174.5m (£126m), which would diversify the main tobacco business of BAT. A hand holding American dollars.

Cannabis Stocks Rise Again

With President Joe Biden in the White House, a Democrat-controlled House, and fifty-fifty Senate, cannabis stocks were well off on a journey to recover from the losses many went through over the past two years. But January already feels years away. Several other reasons contributed to marijuana stocks going up in February. And after those up movements, it all bit of slowed down at the beginning of March. A Reddit earthquake took February. Then, Senate Majority Leader Charles Schumer and Sens. Cory Booker and Ron Wyden also gave the heads up they're going to make cannabis reform a priority this year. Then, at the end of the month, Virginia lawmakers approved legislation that would legalize the adult use of cannabis in the state by 2024. Businesswise, Jazz Pharmaceuticals (JAZZ) was set to acquire cannabis drug producer GW Pharmaceuticals (GWPH) in February. The influx of such news would normally pump blood into marijuana stocks. But when this cycle ended, a bit of cooldown followed until the Mexican legalization step up. Those companies with some focus on the Mexican cannabis market, like Aurora Cannabis, Canopy Growth, and Khiron Life Science, are already feeling the wind of change over their exposure to Mexico. Banks moved to raise price targets on these companies in the aftermath of the Mexican vote. During the last month, several broker-dealers have changed their respective price targets on Aurora Cannabis, which has acquired Mexico’s first federally licensed importer of raw THC-containing materials - Farmacias Magistrales S.A. Of all companies with exposure in Mexico, Khiron Life Sciences Corp is perhaps the most different. It is reported it has introduced Latin America’s first internationally accredited post-graduate medical cannabis program, partnering with Mexico’s TecSalud School of Medicine and Health Sciences. The program is set to benefit medical cannabis practitioners. Overall, New Frontier Data projects that Mexico’s annual cannabis sales would hit around $1.9 billion. While it's never boring to follow the financial market performance of cannabis, what's going to be super momentous is when Mexico's legalization goes into full swing.
Soft Secrets