Why Some Major Cannabis Stocks Dropped Today

Here in the United States, marijuana legalization always seems to be just around the corner… until you turn the corner, and then there it is again, disappearing down at the end of the block. Despite growing bipartisan support for…

legalization, as the calendar turns over to December, it’s becoming clear to investors that legalization — even if it is seems inevitable — will not happen this year.

Perhaps that is why today, on a pretty “green” day for the stock market in general, shares of cannabis stars Tilray (NASDAQ:TLRY)Aurora Cannabis (NASDAQ:ACB), and Canopy Growth (NASDAQ:CGC) are all dropping, down 4.7%, 5.5%, and 5.6%, respectively, as of 11:40 a.m. ET.

So what

But wait: There’s good news on the legalization front as well! (It just isn’t happening in the United States.) Down south of the border in Mexico, it turns out there is an outside chance investors could see marijuana legalized before the end of the year.

As Marijuana Moment reported over the weekend, Mexican legislators have a draft bill to legalize marijuana ready right now, and although it has not yet been officially introduced for consideration, things are moving fast, and a vote could happen as early as Dec. 15. “Leading lawmakers [plan] to prioritize legislation to regulate cannabis,” reports the marijuana news aggregator.

This new law, if passed, will permit adults 18 and older to legally purchase and possess up to 28 grams of marijuana. On the business side, the law will require permits to sell marijuana to be issued within 18 months of a retailer’s application.

Now what

In contrast to U.S. legalization efforts, Mexico’s marijuana legalization law has already been passed, in separate votes last year on separate versions of the law, by both houses of that country’s Congress. Although there may still be disputes to iron out over specific quirks of the law, legalization there seems certain, and it could even happen before the new year. Once that happens, a new market for legal weed will open — 129 million potential customers strong.

The question investors need to ask, though, is whether gaining access to new customers is all it will take to turn marijuana companies like Tilray, Aurora Cannabis, and Canopy Growth profitable. After all, cannabis has been legal in (the admittedly much smaller market of) Canada for three years now. Since then…

 

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