After a monumental January, marijuana stocks and the related ETF took a dive on Feb 6, 2019 thanks to two adverse news. Canadian cannabis company Aphria Inc.’s rejection of a hostile bid and clampdown on CBD’s use in edibles, per an article published on MarketWatch…
Inside the Factors That Hit the Space on Wednesday
Aphria rejected a hostile bid from Green Growth Brands Inc. as the former believes the latter undervalues the company considerably. Aphria shares shed more than 9.4% in the key trading session and 4.3% after hours.
Green Growth’s January’s offer marked a 23% discount to Aphria’s share price, based on the 20-day volume-weighted average price of Green Growth stock immediately before its bid was announced, per Aphria. The company’s shares are up more than 70% this year.
Added to this, New York City has cracked down on edibles that include CBD, or cannabidiol. In January, the Los Angeles County Department of Health also announced it would be cutting points on restaurant inspections for CBD’s use in prepared food and drink starting in July. There are states like Maine, which has legalized recreational cannabis, and Ohio, which has a medical-marijuana program in place, have also clamped down on CBD edibles, per the source.
The compound can be derived from both cannabis and hemp plants. Though industrial hemp cultivation was legalized in the United States in late 2018, the Food and Drug Administration in the United States continues to treat CBD in the same manner irrespective of where it is coming from.
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