Looking For A Hot Cannabis Stock? Tilray Marks The Spot $$$
Tilray, Inc. (TLRY) A Candian cannabis company, recently received permission from the Drug Enforcement Agency (DEA) to export cannabis to the University of California San Diego to determine the efficacy of using cannabis to treat essential tremor, a neurological disorder. Tilray will export a capsule that contains both THC and CBD for clinical trials to the university. The DEA’s unexpected move to permit clinical testing of cannabis as a drug has already created deep ripples within the economy and upcoming midterm elections. The DEA’s permission to import cannabis from Canada to the United States marks a significant step forward for cannabis reform at the federal level.
Tiley was valued at less than $20 million through the beginning of 2018, but its value exploded to $11 billion when it announced it was exporting medicinal cannabis to the U.S. for research. The announcement created a frenzy of stock purchases and stock trading had to be stopped five separate times because of the intense demand around Tilray stock. Tilray was valued at roughly $50 per share before the announcement and afterwards the stock rose to over $250.
After the stock rose to $250 per share, Representative Matt Gaetz from Florida tweeted his dismay at the DEA for placing Canada above America for cannabis supply stating “#Marijuana policy should be #AmericaFirst not Canada First.” After Representative Gaetz’ tweet, the stock fell to about $125, partially because of Gaetz’ actions. However, the stock value decreased largely because the value was stabilizing and many investing firms advised their clients to wait for the stock to stop oscillating before purchasing. Tilray later countered Representative Gaetz’ tweet via an email to MarketWatch stating it agreed the U.S. government should support American cannabis businesses but patients and researches should not have to wait for research when viable options are already available.
Additionally, Tilray is one of the only cannabis stocks listed on the U.S. Stock Exchange. It has dominated the marketspace due to the lack of competition compared to the Canadian Securities Exchange, which has over one hundred cannabis companies listed all vying for investors. Canada is set to legalize adult use of cannabis federally by October 17th and investors have prepared accordingly. Within the last year, the market value of the top five cannabis stocks in Canada have risen from $4 billion to $40 billion.
The DEAs move to allow Tilray to export cannabis into the U.S. may have sped up the time table for removing Jeff Sessions from office as well as helped push cannabis policy into the purview of candidates running for election this upcoming November.
Trump’s anger towards Session has only grown in prior months because of Session’s hard stance against marijuana reform while Trump has stated he supports ending federal prohibition. It is likely Trump will seek an attorney general who is more on pace with his agenda after the November elections if Congress remains a majority Republican. If either chamber loses its Republican majority, Trump will have a significantly harder time confirming a new attorney general to replace Sessions.
Secondly, many states have ballot initiatives they will be voting on to either legalize or expand their existing cannabis programs. Utah and Missouri will both vote on legalizing medicinal marijuana while Michigan and North Dakota will vote on expanding their programs to adult use. It’s expected Michigan will expand to an adult use program with roughly 52.6% of polled individuals responding they support the initiative.
If Michigan does expand its already existing program from solely medicinal to adult use as well, Ohio would face significant pressure to repair and expedite its botched medical program. It is not uncommon for residents from bordering states to visit states that have cannabis programs for their needs. Ohio’s medical program could falter even more with residents from Ohio deciding to avoid the hassles of registering for a medical card and choosing to purchase cannabis from Michigan at the adult use level instead.
Many states are also up for grabs in the upcoming gubernatorial races. Connecticut, Florida, Illinois, New Hampshire, New York, and Rhode Island all have the potential to become democratic states which in turn would spur greater cannabis reform within Congress. Currently, the Senate is composed of fifty-four Republicans, forty-four Democrats, and two Independents. The House has 246 Republicans to 187 Democrats. Even if the Democrats were to win all of the Senate seats, they would have four seats less than Republicans which slightly dampens the outlook for cannabis reform in Congress.
Regardless of the November elections, it can be safely assumed candidates will address cannabis within their states. The DEA’s decision to allow Canadian cannabis imports into the U.S. has incensed the U.S. cannabis industry and has spurred Congressmen like Gaetz to call for an end to federal cannabis prohibition. The cannabis industry is booming and continues to add millions in value every day while also lending itself as a political platform for advocates. Tilray is the first of many cannabis companies that is reaping the benefits of the U.S. market and the November elections will only further propel the industry.