Downside: Trump. Upside: Four states vote for recreational weed.

mindblown

Regardless of whether you’re cool that the Democrats just got washed away in a tide of weird racism and sexual assault boasts and fake hair, and that the children of the corn will now walk around the Oval Office, which will probably end up gilded in gold, while Vlad Putin comes over for coffee to discuss what he’d like to invade next… legal recreational weed just got approved by voters in four US states.

Only Arizona opted not to embrace rec pot, which stands to reason, as illegal pot comes through there in big amounts. And because Arizona is a nutbar.

But in California – the fifth largest economy in the world – and Massachusetts and Nevada and Florida – the scene is set for folks to be able to go buy pot at their convenience store. Eventually.

There’s still going to be some work for those states to actually put the rule changes together to see those referendums move into law, and federally the stuff remains illegal (and President Trump is unlikely to put the issue in the forefront of his ‘let’s change everything, everywhere, always, no matter what’ platform). But it’s a huge step in the right direction, especially for investors in weed stocks that are associated with those places.

While many weed stocks are down today (along with many everything stocks), certain ones are up. Tinley Beverage Company (TNY.C) is up 10%, to $0.64 (well played those who jumped aboard back at $0.10 when we first started telling you about it), on the back of its California market for its hemp-based (and soon THC based) drinks. Nutritional High (EAT.C) is leading the pack, up 22% to $0.415 (well played to those who jumped aboard back at $0.10 when we started telling you about it), on the strength of its edibles plans.

Finore Mining/KushtownUSA (FIN.C) was up 6% to $0.42 – up from $0.30 a week ago – before profit taking kicked in and leveled it off. Liberty Leaf (LIB.C) is up 7%, on the back of its California dispensary/growhouse MOU, which I’m told is being actively negotiated as we speak in terms of moving it to the next level on its way to definitive.

Arcturus Growthstar Technologies (AGS.C) climbed on the back of its Florida greenhouse LOI, with that state voting for full rec last night. That’s up 7% to $0.425. I bailed on that stock when it hit $0.26 on news it was starting an app division. But regular readers rode it to a 255% rise before that, and it’s up a third since.

The big winner in weed today is a stock not a lot of people have been talking about, but it has Nevada exposure right up the jacksey – Marapharm (MDM.C) is up 38% today, and I expect it to keep moving from there. MDM has a big play rolling out in Nevada but, as its CEO reminds investors, they’re only going to benefit tangentially in the short term.

Linda Sampson said in a news release late last night, “All of our production and cultivation is pre-sold for medical purposes so the ‘yes’ vote does not affect our present structure but it makes us aggressive for expansion in Nevada in cultivation and distribution for recreational product and we are on the hunt for acquisitions within the space.”

I’ll be writing more about Marapharm in the near future, with a lot more detail to come, on a play that, even with the big swing today, has a lot of value still untapped in my opinion.

Of the down stocks, mostly they consist of the airware players that ran the table on the back of a sector-wide rise they never had any game in; your Abbatis, Lexaria, Affinor, and Endexx deals, as examples.

One down stock is interesting to me right now because I’ve pushed a little deeper into it after dismissing it for some time, and as far as US plays go, it’s valid. Cannabix Technologies (BLO.C) is down today some 10%, with their plans to develop and prove out a cannabis breathalyzer. The company has competition in the US with a company that says it’s undergoing trials in the field with sheriffs, and I’ve knocked Cannabix on the basis that its tech has moved from room-sized to desktop-sized, which isn’t workable in the field.

But a recent discussion with one of their insiders revealed to me that plans for the handheld version of the unit at far progressed, and that the company sees less value in law enforcement than it does in workplace enforcement and perhaps even automobile-based products. I concur, this is a strong plan with a much wider use case, and I’m taking a long hard look at the company after a year or more of telling people I didn’t trust it. More on this as news comes to hand.

On the medical side, North Dakota and Arkansas approved medicinal cannabis for specific conditions last night. Neither will become massive weed states as a result (at least not legally). Maine, which was also voting for recreational use, and Montana, which is voting for medical use, are currently still too close to call, but you could fit 50 Maine-sized economies into California’s and nobody would even notice.

So what happens next?

I’ve been saying for a while there’d likely be profit-taking on the referendums, and that’s proved to be the case. In a generally down Trump-depressed market, the average is a small drop in stock prices today.

But those companies with California (and Florida and Nevada) exposure are having their way with the market, and I expect that won’t slow down going forward.

What it means for Canadian weed stocks is, cross a border or die on the vine. The Canadian bongosphere is being hamstrung by government inactivity on the pathway to recreational approval, and if the buzz I’m hearing about the feds preferring liquor stores to be the distributor for weed is true, that’ll continue to hamper the market. Anyone who has experience trying to get a wine or beer sold across the country knows that system is broken, and I wouldn’t want to have to put marijuana, with all its intricacies and variations, through that pipe.

— Chris Parry

FULL DISCLOSURE: Liberty Leaf, Kushtown, and Tinley are Equity.Guru marketing clients, and the author has stock in all three.

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